As parents our number one goal is to raise our kids to be kind, compassionate human beings who can function in the world as independent adults but at kid’s age it’s essential that we also start teaching them how to become independent. This includes how to manage their money!
Parents, you can use one old-school tool to give kids hands-on experience with managing their money; the old-fashioned allowance. The key of course is to help your kids manage their allowances rather than letting them blow it on whatever the new toy of the week might be.
Here are some tips to help you do just that…
Number 1: Have them use allowance for the basics.
One way to restrict how kids use allowance is to require that they cover some of their own basic needs using those funds. Older kids for instance can purchase their own school clothes or supplies based on a preset budget. Some parents even find that giving kids allowance for grocery spending is helpful. Letting kids pay for their own breakfasts and lunches on a budget is an excellent way to help them understand why pop-tarts for breakfast every morning is both physically and financially unhealthy.
Number 2: Use the three jar method.
Another option is to enforce good financial habits for kids with a three jar method instead of a single piggy bank give kids a jar for saving, spending and giving. These are the three main buckets of our personal financial lives after all. This way kids can learn to save and give early on.
Number 3: Consider commission based chores
In your house it can work like this. Your four-year-old daughter has a short list of expected chores including making her bed, putting away her clothes and feeding the cat. She has to do these chores first. Then, if she wants to, she can choose other pay chores like folding towels, helping with the dishes, mopping the floor or washing the stairs. Regardless of how you decide to pay your child and how much you decide is appropriate, giving your kid money to handle from an early age is a great idea. It is one sure way to boost their illiteracy in a hands-on environment.
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