It is important for children to learn the value of working hard and spending responsibly. Learning these valuable lessons will help them prepare for a lifetime of fiscal responsibility. There are several easy ways to start your kids on the right path. These easy steps will teach your kids how to work for the money they receive, and how to spend wisely.
1. Give your kids a job
Instead of offering your kids a weekly allowance, hire them to work in your home. Post a list of chores that they can do to earn a wage. Assign each chore a dollar value based on the difficulty of the chore, and discuss with them why you chose each pay rate. Taking out the garbage might earn $1.00, while doing laundry might earn $3.00. Show your kids what the grand total is for each week so they can see their maximum earning potential. Make sure that your children understand that the pay is only for work they perform well. If they do sloppy work, you can either withhold pay entirely, or give them the opportunity to re-do their work until it is worthy of a paycheck.
2. Have each child balance their “Checkbook”
Create a simple checkbook-style ledger for your children and have them fill it out every week. Begin with the amount of money available to spend, and have them keep track of any purchases that they make throughout the week. The goal should be for each child to have a balance at the end of the week. This is a good opportunity to teach them the difference between living “paycheck to paycheck” and spending responsibly.
3. Talk about spending goals
Discuss with your children how they might want to spend the money that they earn. Are they looking to make big purchases that require saving, or do they simply want money for candy and snacks each week? Help them create a plan for their goals. If one child wants to buy a bike, help them research prices and calculate how much money they need to make each week to reach the goal.
4. Don’t be afraid to let them make mistakes
You should avoid weighing in on every spending decision your kids make. If one child decides to spend all of the money they have earned in the beginning of the week, you should allow it. When he finds something else that he wants to buy at the end of the week, take the opportunity to discuss how his earlier decisions affected his ability to buy for the rest of the week. Be sure not to give your kids extra money if they make poor choices. You can consider giving them a loan that must be repaid the following week, as this will provide a teachable moment about credit cards and borrowing.
5. Reward good behavior
Has one child “maxed out” on their earning potential for six weeks in a row? Maybe he has been able to save up a significant amount of money by not spending everything he earns in a week. Consider rewarding this behavior with a cash bonus. Praising and rewarding good spending habits can help reinforce the behavior.
Children should begin learning fiscal responsibility at an early age. Knowing how to earn money and how to manage their earnings will help them become responsible adults who won’t need to lean on mom and dad for help with money later in life.