Children must learn value of money
Children don’t know the value of money, parents often complain, adding that they learned it the hard way.
Money management skills are an important ingredient in success. Parents should bear primary responsibility for teaching these skills because, consciously or unconsciously, parents serve as models to their children in money management.
Attitudes toward money that were visible during developmental years convey the idea that money can or cannot buy happiness. In families in which parents manage their money well and enjoy life, children learn that money is an everyday reality and its value depends on its use. Parents can:
• Teach children to live within a budget, pay the bills, ensure a future security and use some money for pleasure. No matter what their future income, this can be a workable pattern.
• A child who learns early to live within those bounds feels in control of his life. If setbacks or reverses occur, he can cope and his stress levels will be lower.
• By observing parents who have good work skills, children learn that acquiring education and training means securing a good job and better pay. As adults they are able to make better choices for their livelihood and lifestyle.
To teach money management skills, parents can:
• Set up a reasonable amount for a child’s allowance. Discuss what duties must be performed to receive the allowance, keeping them in line with the child’s age and ability. When the duties are satisfactorily performed, that money is the child’s and should never be taken away or borrowed from, except in cases of emergency. Explain to the child what the allowance is to cover – school lunch money, entertainment, toys, etc.
• Insist that a portion of all money, whether it is from the allowance or other sources, be saved. Open a savings account and have the child visit the bank to see where the money is kept. If gifts are received from grandparents or relatives, let the child see that the deposit to savings has been made.
• Teach them to operate on a cash basis, to save until the required amount has been obtained.
• Let them make decisions on how to spend their money. If they learn they can buy either a toy or a ticket to the movie, they have learned to make a simple decision.
• Teach them to be good buyers. Comparison shopping means spending all your money at the first store or buying at the second and having some money left over.
• Let them be entrepreneurs. Risk a little capital to buy supplies for a lemonade stand or materials for salable crafts.
• Encourage them to recycle paper, glass and aluminum.
• Older children who earn money outside the home can be encouraged to save for college, to buy an automobile or to invest their money for sound growth. A checking account, as well as a ledger for recording expenditures, teaches them to balance the account.
• Discuss utility costs, food, insurance, medical care and taxes with maturing children. Healthy open discussions about family finances are better than unanswered questions.
• Never threaten a child with withholding money for behavior, or in the case of an older child by threatening to cut them out of a will.
• Always remember there is a relationship between money, motivation, achievement and quality of life.
Harold H. LeCrone, Jr., Ph.D. Copyright 1986
