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Money Management for Kids
Imagine the U.S. without a constitution or a corporation without a business plan: that's your family without a financial policy that reflects your values about money and possessions. If you want your kids to grow up with a healthy respect for money and know how to manage it, your home must be the classroom, and you're the lead teacher. If that sounds scary, don't worry.
Good resources abound to help you. And, really, just five basic principles will give your kids a good foundation for thinking about money. Plus, there are natural opportunities to teach simple economic lessons in the course of daily life.
Financial courses geared toward kids provide step-by-step workbooks. There are even programs that parents can use with small children.
Money management day camps are popping up all over the country.
Debit cards for teens keep them from overspending and allow parents to manage and control their teen's spending, such as limiting how and where the card can be used.
Some banks have teen checking and savings accounts that include online money management tools to help them develop basic budgeting skills.
Five Basics to Teach Your Children
Responsibility. Don't automatically replace items that are broken, destroyed, or stolen because of a child's irresponsibility. Your child should help pay for a replacement.
Honesty. Teach your children that honesty is not only the best policy, it's the only policy. Make clear the consequences for taking something that belongs to someone else. Explain that "taking" also means borrowing something without asking permission, including going in Mom's purse or Dad's wallet to get money.
Generosity. Young children can be taught to share their belongings with others. As kids get older, encourage them to volunteer in your community so they can experience the satisfaction of giving so others can benefit.
Identity. Emphasize your unconditional love and your children's value as unique individuals so they won't define themselves by what they own, wear, or drive.
Gratitude. Nurture contentment with what you have and model and attitude of gratefulness. Make sure your kids know that none of us always gets what we want, but most of the time, we will have more than we need.
Everyday Dollars and Sense
The next time you use an ATM machine, take a few seconds to explain that the machine isn't printing money. The money is coming out of your account-a connection your child won't make without your help.
At home, make money a game-literally. Getting the whole family together for Monopoly, Life, or Payday provides fun lessons in taking out mortgages, paying bills or tuition, or buying stock.
Brainstorm with your kids about how you can work together to achieve financial goals. For example, if you need to cut back expenses by $2,500 over the next year, that works out to $6.85 a day. Think of ways you might cut back on spending by $6.85 a day. Could you downsize your morning latte? Could your kids make sack lunches? Could you consolidate errands and use less gasoline? Drink water when you eat out?
Estimate all the cash you will need for the next week. Store cash in an envelope in a secure place. Keep a pen handy and instruct family members that everyone should jot down how much and when they take out cash so you can track spending. At the end of the week, talk about where the money went.
As your children enter their teen years, give them a clothing allowance so they can begin to learn to budget. This way, when your teen must decide between one pair of expensive shoes, or a less costly pair and a new pair of jeans, he's learning the value of money.
Tell us: How you are teaching your children about money?
The Busy Mom's Guide to a Happy, Organized Home includes hundreds of ideas for managing family finances. Visit www.familymanager.com to learn how Family Manager Coaches help families cut costs and manage life efficiently.