Part Four: Teach Kids How to Handle Money Wisely
“Don’t leave home without it.” I’m not talking about an American Express card, but rather the know-how to handle money wisely. I’m sure we can all think of people who did leave home without it and are paying the price now. That’s why teaching our children about money-management--beginning at a young age--is such an ordinary, yet important part of being a super parent.
A simple way to raise money-wise kids is to start them on an envelope system as soon as they’re old enough to grasp the concept. An article in the latest issue of Thriving Family magazine suggested using the 5-envelope system: Give, Save, Spend, Clothes, Gifts. Then help them to divide any money they earn into those envelopes (10% in give and 10% in save as a general guide).
That begs the question: how do kids earn money? The same way we as adults earn money—work. If I want to buy something but don’t have the money for it, I have to save for awhile, or I have to find additional work. Most of the money problems adults face are because they failed to do either. So I think it is helpful to prepare our children for the real world by helping them learn early that if they want something but don’t have the money, they have to patiently save what they earn, and they probably have to find additional work as well.
Children can find plenty of work for which they can earn money right under their own roof. Doing certain chores is just a necessary part of being a member of the family; but extra jobs can be a source of revenue. Dave Ramsey said this approach worked for his family. In addition to mandatory chores, there were other jobs: if the kids did them, they earned a small allowance each week; if they didn’t, they didn’t get paid. I like that idea. It is good training for the life in the real world.
Some practical notes on the envelope system—it would take my 3-year old months to save up five dollars in his clothes' envelope. Does this mean he is relegated to one shirt from Walmart for the next year? Of course not. My husband and I will still be buying our children most of what they need (and probably want, too—within reason). But when we go clothes' shopping, for example, I’ll take their envelopes with us, so they can see how buying stuff works, and they can contribute. As they grow (and earn more), I’ll probably expect them to pick up more on their own.
Toy shopping is another ballgame. They don’t need more toys, so anything they want in addition to what they already have, they are going to have to save for and pay for out of their own funds. Unfortunately, they usually see something they want at a strange time when I don’t have their envelopes with us, so this isn’t a perfect system yet. But it’s a good place to start.
Even if we make some mistakes here and there, by ingraining good money habits in our kids, we’ll send them out on their own not needing a bail-out.
The rest of the "Super Parents are Just Ordinary People Doing Ordinary Things Consistently" series:
Part One: Teach Them about Jesus and the Word
Part Two: Be Who You Are
Part Three: Teach Children to Work