While the allowance money was off-and-on, and mainly determined if she had any money for allowance, it wasn’t the only source of money for me to practice with. I was supported, begrudgingly, to get a paper route in the sixth grade.
Going home every day to fold and deliver newspapers was a big responsibility. Especially when my friends were going out to the park to play ball. And let’s not forget about Saturday, and the dreaded 5am wake up to fold and deliver the massive Sunday paper. Nothing more than that job experience taught me the real value of a dollar!
Point is, I had money every month coming in. And I had money to practice with.
Parents can give their kids practice with money in a variety of ways. They might give them a regular allowance, pay them for tasks that go above and beyond their normal chores, reward good grades with cash, or encourage them to save for special purchases or charitable donations. The specifics don’t really matter, nor does the amount of money, which may vary based on a family’s financial situation, LeBaron said.
The important thing is that parents give children hands-on experience with money early, when the stakes are still low.
Tilden wades into the “money for nothing” debate with the three-piggy-banks concept, which isn’t new, but that he’s tweaked to drive home a financial-concept lesson. “Every week, kids should split their allowance three ways: long-term savings, spending, charity,” Tilden says. “They can choose how much to give to each, so they are thinking about what money goes where. They can still blow most of it, but it’s up to us to nudge them in directions that make sense.”
3. Let Them Get Hands-On Experience
As parents, we like to teach kids things at a young age. If they fall, they bounce better than adults. You can do the same with money. The risks and dangers of mismanaging money is less and easily supervisable by you.
Waiting until their 18 years old or in college is too late. They’re independent and for most, they think they know more than you by this time. So it’s very difficult to teach them about money at that stage of their life.
Get money in their hands and let them learn from their mistakes.
LeBaron and her colleagues at Brigham Young University interviewed 115 student participants, including 90 college students between 18 and 30 years old, and their parents and grandparents. The research showed those who had hands-on experience with money while they were growing up learned how to work hard, how to manage money and how to spend it wisely.
Money management isn’t only for adults. Kids brains are like sponges and they learn quickly. Let them spread their wings and learn to fly while you can hover over them and make sure they learn valuable lessons about money.
How about you, any tips to share on how you taught your kids money management?