Friday, July 11, 2008

Parents, Don't Be Sissies: Teach Your Kids to Manage Allowances

How many times do parents hear these words…“Mom, buy me a book.” or “Mom, I need money for the movies.” You give in and hand over extra money because they blew their allowance and it’s the easy way out. What are you teaching them to do? You are teaching them to spend YOUR money and that it is OK for them to spend more than they have. Take a look at these five ways to help jump start good money managing skills for you and your child.

1. Stop giving allowances. That’s harsh but what is your child or children doing to earn that allowance now? Watching TV and playing with friends? You might as well call it an endowment to your kid’s summer fund. Show your kids that allowances are actually earnings for work performed. Here’s how.

2. Determine what type of work your child is able to complete. Create a list of extra work that is unrelated to normal household responsibilities such as making the bed or feeding the dog.

3. Start Giving Allowances: But I just stopped them. Yes, I know but now you will be giving allowances to help teach your children how to manage money and learn from their own successes and failures. Instead of doling out money the “sissie” way make a list of what they will be expected to pay for. Also, pay your child on time. This teaches your children the value of honoring obligations.

4. Create a spending plan. In the past your kids’ plan was to ask you for more money. Now that they can see some savings add up, it is time to help them plan how not to spend it all at once. A small notebook will be adequate enough for the time being to write down income and expenses. Designing a spending plan can be as simple as writing a “to-do” list. If one of your child’s objectives is to go to the movies twice a week then this simple method will help them to check availability of money. When you hear the words “Mom I need money for the movies,” just ask “can you afford it?”

5. Set examples. This is by far the most important step. If your child watches you spend unwisely, he/she will tend to emulate you and believe it is OK to spend money well over your budget. Generally speaking your child will learn how to manage money through their own experience and your guidance.

Managing money is not easy and many people never learn how to turn it into a tool that will benefit the rest of their life. Schools don’t teach money management so it is left up to parents. Follow these five tips to help your child gain control over money instead of letting money control him or her. You will no longer have to take the "sissie" way out and give in to unwanted requests and you will also have a financially healthy child

To read more on how to teach kids to manage money go to Kids’ Money here and visit the Kids’ Money Store for more books.

Write it down,