This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Monday, September 14, 2009

Article: Teaching Kids About Money

Posted By Paul

As a new parent I'm thinking a lot about how best to deal with money and my child. I'm planning on going with an allowance system when they are old enough. I remember that when I was a kid that all of my neighborhood friends had the system where if they wanted to do something they had to ask their parents (e.g. "Can I have money to go to the movies?"). I enjoyed having my own money so that I didn't have to track down my parents and ask for money for each little thing I wanted to do.

I also remember that with my friends that if they were given $5 to go to the movies (which of course back then was ample) they would make an effort to spend every nickel, since every bit they didn't spend just had to go back to their parents. They would pay for the movie, and also get a soda and candy (and maybe a video game or two). I would just pay for the movie and skip the expensive snacks so that I could keep my velcro wallet a little fuller.

I liked the fact that this article encourages the parents to let the child aware of the family finances and also highly discourages the parents from bailing out their child when they want something but have already spent their allowance.

Click on the link below to read the article. Are there any other great ideas for ways to teach children money lessons?

The Four Terrible Money Mistakes We Make With Our Kids


Anonymous said...

Excellent, humane psychology in this article. Here's an additional tip I used with my daughter in her allowance days: she got to spent half as impulsively as she wished. Half had to be saved for "important" purchases, and I participated in helping her decide what was important.

It soon was clear to her that once the pocket money was gone, that was it for the week, and she began budgeting her available funds in about the 5th grade. (As an adult, she now handles money very responsibly.)

I've since heard a variation on that plan: to divide the allowance so that part is pocket money, part is savings (or significant purchases), and part is for worthy causes, helping to teach that we are all connected to a larger world.

Paul said...

I like that you are involved in your child's financial life but they are also making their own choices. I also really like that you are instilling them with the idea of saving for important things.

I think when the time comes I'll try to do something like this.

Thanks for the idea!