When we polled parents and asked them how much their parents had taught them about money and about being financially responsible, a whopping 65 percent said "Nothing." (Eighteen percent said "A little," 10 percent said "Some," and only five percent said "Lots.") The challenge, then, is to teach our kids about money while having no role models on which to base these teachings. How can you assure that your children will know the value of a dollar, understand the importance of saving, and make wise financial decisions once they grow up to be adults? The parents of Parent Soup believe that consistency is the key to giving kids a healthy attitude about money. So however you formulate your plan of attack, stick with it. And remember the pay-offs: Not only will your kids know their way around a bank statement, one day, they'll be able to support you in your old age.
Explaining Where Money Goes
"When my daughter started asking me questions about why we couldn't buy all the things she wanted, I sat down with a sheet of paper and wrote at the top the money I made. Then I showed her how much Uncle Sam takes and what is leftover. Then I started to subtract the bills I paid. Then the money that went in to savings. When she saw what was left over she then understood why I couldn't buy her those expensive shoes she wanted. Because she was raised with a budget she knows how far her money will go. Now she is in her first year of college and pays 1/3 of her own tuition."
--Debbie, Virginia
Determining How Much Allowance to Give
"I've heard that a child should receive one dollar for every year old they are. We started giving our daughter $7 a week on her seventh birthday and it has worked out very well. She puts $1 in her church envelope, $2 in the bank, $2 to save for a special toy, and $2 to blow. It has taught her many valuable lessons already."
--Ellyn, Ohio
Putting Allowance to Work
"Start kids out with an allowance, but make them save 1/3 for college or future endeavors, 1/3 for long term goals, like an expensive toy or clothes, and let them spend the last third freely. They'll see soon enough that some things are worth their money and some aren't. If you always tell them what to buy, or not buy, they won't learn for themselves."
--Silvia, New Mexico
No More Handouts
"Parents should stop buying things for their kids (I know this may sound cruel). Instead give them a steady allowance and teach them to save for those things they really want. This method not only teaches them about saving but also about something called responsibility. After saving several weeks to buy that much needed Power Ranger action figure, they suddenly feel that their diligence and patience is more rewarding than that sad puppy look and persistent wailing."
--Parent Soup member Father of 3
Teach Responsibility While Keeping the House Clean
"In our house, we use a combination of allowance and a 'Mom Box' to help teach responsibility, financial and otherwise. The Mom Box is a box or basket (or whatever) that you put items in that your children leave out. Then you have a pre-set amount of time an item must remain in the box (let's say three days). If the child feels that they must have it now, he or she may pay a pre-set amount of money (maybe 50 cents) to get it out early. When used consistently, it really works well."
--Brandie, California
A Voice Against Allowance
"I've found that allowances don't work because they are based on responsibilities, and responsibilities are not optional. My children have no choice but to clean their rooms. I told them that to support their habits and hobbies, they have to make the choice to do some other kind of work for pay -- either special projects around the house or outside work. My house has never been cleaner."
~ Shanon, Florida
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