Some recent financial troubles in my home made me realize that I wanted to teach my children how to live life well by giving them the gift of financial health. By managing my own finances wisely, I could pass this valuable lesson on to my children. I needed to get my own affairs in order, first! After attending a financial health class, I remember painstakingly cutting up all of my credit cards and creating a list of debts to hang on the refrigerator. As I paid off each debt, I crossed it off. It was a visual for the entire family to see, and a very powerful tool.
I needed to do more than model for my children, though. There’s a Native American saying I used as a guide: “Tell me, and I’ll forget. Show me, and I may not remember. Involve me, and I’ll understand.”
By having my children work and get paid, I am involving them and teaching them about the value of saving and spending wisely. Our kids are now required to put 50% of any money they get from gifts, chores or other things into their own savings account. There was a lot of groaning at our house, at first, but in July I started to match what my children are putting into their accounts and they are excited to see their balances grow. Children of all ages can benefit from these kinds of activities!
Give 3-to-6 year-olds small, manageable chores. Instruct children to return their toys to a designated basket at cleanup time. At this age, pay them immediately. This provides instant positive reinforcement and young children are more willing to do the chore the next time. Small children learn to save and spend money with visual aids. Using a clear container for their money allows them to see savings go up as money goes in, and when spending their money, they see their money go down.
For 7-to-12-year-olds, a chore list with an assigned dollar value to the specific chores works well. At this age, pay day should be once a week when the work is completed. Older kids can also be given two envelopes to divide money earned between spending and saving. Spending at this age fosters problem-solving skills because they learn to spend their earned money differently than money just given to them.
Which isn’t to say that some chores aren’t completed without pay! My kids are part of our family and expected to contribute, but I take advantage of the many teachable moments that are offered by compensating my children for performing some tasks around the house. And they’ve learned! When I use my debit card to pay for something instead of cash, my kids bust me every time. I can always rely on my children to be my financial compass, and I do the same thing for them. When they want to go out for dinner or buy something we can’t afford, like a new cell phone, we always look at their savings and our family budget. When the money’s not there, I love to blame it on the budget.
And when they ask me to put some more money in the budget? I tell them to head out back and shake the money trees in the yard! We were living paycheck to paycheck, but now we have a plan and we regularly see the results of our efforts as a family.