Photo by Matt McGee
The following is a guest post from Jean Chatzky:
Being a financial reporter (not to mention a mom to two teens), I know the importance of teaching kids the value of a dollar. Teaching kids money management at an early age, as well as instilling in them the importance of a “good deal,” will help them later in life when the time comes for them to be on their own financially.
Here are some of my favorite tips for raising a financially savvy, deal-seeking kid:
Put the Money in Their Hands
Some families don’t believe in giving allowances to kids, but I do, with certain restrictions. If you’re going to give your kids an allowance, make sure it comes regularly each week -- like a paycheck -- so they can start to budget for things they’d like to buy or goals that they’re saving for.
Parents usually give $0.50 or $1.00 per week in kindergarten and then give a raise of $0.50 or a dollar each year. This will fluctuate, though, depending on what you expect your kids to pay for. At ages 6-8, they might be responsible for paying for their own candy. At around ages 10-12, you might expect them to pay for movie tickets or trips to the mall food court with friends. If you’d like them to start putting away a portion of their allowance each week to a college fun, or give away part a percentage to charity, you’ll probably want to give them a little more.
The Basics of Budgeting
Once they’re making their own money, whether it’s from an allowance, babysitting, etc., teach them the importance of budgeting. One of my favorite strategies is the envelope approach. Give your kids a series of envelopes and have them label them according to the different things they plan to use the money for. For example, they might have envelopes labeled spend, save, charity, etc.
Let Them Shop
Once a month, sit down with your child and make your grocery list for the week. Then, let your kid do the sleuthing for coupons. Give them the Sunday paper and let them clip away, or direct them to the Internet where they Google coupon codes. Take your kid on the shopping trip (coupons in-hand) and after you’re done, show him or her the receipt with the breakdown on how much you’ve saved.
Set a Good Example
One of the biggest pitfalls parents encounter when trying to raise a money-smart kid is not practicing what they preach. If you’re talking to your kids about the importance of budgeting, saving and the value of a dollar, you’ll want to convey that in your own actions. If your kids see you dealing with money choices responsibly in your own life -- for example, if you’re shopping for a new car, you might tell them while you’d love to have a brand new BMW, but you can only afford the Toyota, so that will have to do -- they’ll have an easier time making decisions like these and dealing with the fact that they too can’t have everything they want when they want it.
What steps are you taking to raise a deal-seeking kid?
Jean Chatzky is financial editor for NBC’s Today Show, a columnist for More Magazine and the author of "The Difference." She blogs daily at www.jeanchatzky.com.