How Not To Raise A Spender?

It is not easy to get your kids to manage their money, but it is important to teach them to do so at an early stage, so that when they grow up, they can be financially independent.

1.         Begin with a weekly allowance

            In order for kids to learn money management, first they need to have their own money.  So, start them off with a weekly allowance.  Let your kids know what is worth spending their money on but always leave the final decision to them, so that they can learn from their mistakes.  In the event that they have spent all their money in the first few days, don’t give them extra cash.  Instead, make them sandwiches to bring to school, so that they can’t buy anymore goodies from school.  Don’t bail them out or they will never learn the consequences of reckless spending.

2.         Start them young

As soon as they begin to demand for the things they want, it is time for an allowance.  Usually it is around the age of 4 to 6. Most parents would wait until their children are in their teens.  While they are still young, take the opportunity to discuss with them about money.  They are quick to listen and take advice from their parents.

3.         How much is enough?

            Giving too much cash to your child may not be better for him. Kids don’t know how to differentiate between a want and a need.  They won’t see the reason why they should save when you can buy them whatever things they want.   So, if you decide to give them a big allowance, tell them that you won’t buy them anything extra.  Instead get them to start saving their allowance for the things that they want.  The satisfaction of getting something after weeks of fighting the urge to spend gives them a boost in self-confidence and a valuable lesson about saving money.

4.         Working for cash

            Some parents make their children work for some extra allowance by giving them household chores.  I would strongly advise against this, as then they won’t lift a finger to help you when they don’t need the money.  They should understand that everyone in the family is expected to contribute their time and energy.

5.         Have a savings account

            Set up a savings account for them.  Make sure they keep their account balance updated every month. It would give them confidence and satisfaction just seeing the numbers increase.

So, be wise in teaching your kids about how to manage their money. They will be more aware of the value of money when they have their own money.