The best way for our children to learn proper money management is to start teaching them at a young age. Because this practical skill is not taught in most schools, the best way they’ll learn and understand money is through you. As a parents, you have the advantage of teaching hands-on lessons and showing them through living the lessons out. Teaching this will also benefit your understanding and use of money. With the overall debt of Americans amounting in the billions, it’s clear adults today have a limited understanding of money.
Give Them Commission, Not Salary
We all know the salary employee who comes in late and leaves early but their paycheck is always the same–fair, right? Whether they’re finishing the job or not, their pay remains the same but negatively impacts their work ethic and drive. Use this same concept for chores. Instead of giving your children a set amount each week, give an amount to a task. Say taking the garbage is $3, cleaning their room each week is $10. Then, pay them based on how well they do the job – is it worth the full $10 or only $5? You decide. This will teach the satisfaction of doing their job well.
Multiple Savings Jars
As an adult, your money doesn’t go into one giant savings jar, it goes towards multiple accounts. You’re expected to donate, save, and pay bills with one check – so why teach your kids to save into one piggy bank? Teaching the importance of giving and creating boundaries between saving and spending, will better prepare them for using money in the real world. One way to divide their money is using the 10-10-80 concept, where 10% goes toward giving, 10% toward saving, and 80% toward spending. However, because they necessarily need the 80% for spending, encourage them to save or give more of their money. Click here for an idea on starting this for your kids!
Create a Timeline
Getting kids excited about saving money isn’t easy, but creating a visual representation of their progress will encourage them to reach a goal. Allow them to pick a savings goal–whether it’s for a new toy or just for savings, and let the create the timeline on their own. They can color/draw it and fill it in as they go. It’ll give them the opportunity to get creative and learn a lesson on working toward what they want. Click here for ideas on timelines!