Saturday, July 3, 2010, AM | Leave Comment
Most of us know but don’t realize that not only the grown-ups have money problems, our kids have many more problems to handle money than we do. When my son was 5 years old, he once told me we did not have money problem. I said yes we did. He said it was very simple. You just go to an ATM and press a few buttons and you get the money. He will be 21 in October and has learned a lot about the value of money since.
Many folks have the same mentality of a 5-year old. They just keep using their credit cards and consequently are drawn into the debt quagmire which at times turns into nightmares. If they realize that using their cards, they borrow [rent] the money and they have to payback one day, they will not go on a shopping spree especially when they can’t even afford it.
Here is how you can teach your kids about financial responsibility:
Money must be earned
Give them responsibility at home in the form of doing chores. You can pay each of them up to $1 for each year of their ages. Rotate the chores so that on one child feels stuck with the worst ones. When you pay them, make them put half of their wages in their own Savings Jar.
The importance of charity
Learning values is an important part of learning about money. Let your children contribute about 10% of their savings to a Charity Jar. It’s important for them to have a say in where it goes.
Taxes are a reality
Let your kids grow up with an understanding of how earnings and taxes really work. At least 15% of their allowance should go in Family Tax Jar.
Irresponsibility can result in fines
When you teach them about responsibility in your everyday life, let them know that if they don’t meet theirs, they will be fined. However, don’t allow them to get into finger-pointing.
Respect what money can buy
Part of appreciating money is taking care of your possessions and your environment. Teach your kids to shop sales instead of blowing the money on a $200 pair of brand-name pants.
In a Nutshell
Granted it’s difficult to teach anyone the value of money – grownups or kids, but we all have to try somehow to make them realize to live within their means so that they can be debt free later in life.