Financial Responsibility for Kids
I want, I want, I want. Something we hear from our kids at their birthdays, holiday time or whenever they see a commercial or catalog with new toys. How can we teach our children the value of a dollar? Whether or not you give an allowance, you want to teach them to budget any money they receive. Together you can come up with a plan as to how they will save or spend their money. In our home, we give an allowance of $20 per month per child, dependent upon the fact that they do their chores and maintain their responsibilities within the home. They then have to split that money among three categories, savings, spending and charity. We tend to allow them to choose how they split it, but also provide guidance. As for holiday or birthday money, they automatically put that in their savings. We made this decision on the premise that they receive enough material items during those occasions that the cash should be saved. In order to help the kids understand and actually “see” their money, we have been using a virtual online account called FamZoo. They are able to log in and manage their money, seeing details of each account and also can debit or credit the account. “Let’s check FamZoo” has become a common phrase in our house.
Our son is a Lego fanatic and is always scoping out the new products in the catalogs and online, but they are expensive. He is now in the habit of making an itemized list of the product he wants and the cost associated with each product. Then we go through the list deciding what is essential to have and what can wait. Finally, we determine whether he is close to a birthday or holiday and can ask for the items as gifts or if he has enough in his spending account and that’s what he wants to spend the money on. We are also open and honest about purchases we make and talk about the expense related so the kids start to get an understanding that these money values will carry through the rest of their lives.
There should also be goals associated with savings now so that they understand in the future how to allocate the savings funds towards emergency savings, educational savings and large purchases like a home. We have also chosen to create a charity account in which the kids can choose what charity to give their money to. We wanted to teach the value of giving to others and involve them in the process since they will be asked on many occasions throughout their lives to give to a charitable cause. Each child is allowed to give to a charity of their choice, whether it is a local charity they know of, or something they have just learned about and touched them. They have felt really good about the charitable choices they have made and some months choose to put the majority of their money in their charity account.
As children transition into adulthood, they will constantly be faced with financial challenges. Teaching children about saving and spending at an early age lays the groundwork for good financial habits and decisions down the road.