In this article, we consider ways of teaching kids about money.
I often talk with clients about how to teach their kids about money.
I’ve also had many conversations with my husband about ways to educate our son about money. I don’t want him to be spoiled, or overly focused on money. But I do want him to understand that we work hard for the money we earn, and we can’t afford to get every new toy that catches our (his) eye, because we have other things we need to use our money for. I also don’t want him to be constantly worried or thinking about money, because that’s not his job.
It’s a tricky balancing act. And then there’s an allowance. How to do it, whether to do it, how much to give, etc.
I read a couple articles recently that offered up some tips on teaching kids about money.
This article (link opens in new tab) mentions the benefit of paying an allowance (about the amount in dollars of your child’s age), and requiring them to allocate a that allowance by percentage to charity (10%); immediate spending or quick cash (30%); medium term saving such as saving up for a bike or laptop (30%); and an amount towards future expenses like college (30%).
This article (link opens in new tab) gives some concrete examples of how to teach kids about money at different ages. The early childhood timeframe can be an opportune time to start the teaching. The article mentions letting kids mess up, for example, let them regret a spending decision and sit with that feeling. And also, for a child who’s not a natural saver, perhaps offering an incentive to help them save – like matching every dollar they save. And doing it with actual dollars and coins, rather than electronically, can be another way for them to learn.
I’m also reading a good book right now about allowances and how they can be used to teach kids many lessons about money in a very immediate and practical way that can change over time. The book is called The Art of Allowance, by John Lanza.
I’d love to hear from you too; how do you teach your children about money? Click here (link opens in new tab) to post your ideas and tips in the contact us message form.