Photo Credit: Getty Images
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."
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."
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