Do you remember the day when your dad announced you would be getting a weekly allowance of twenty-five cents? I do, especially because I was the oldest of the siblings and they were still getting the standard ten cents a week. Yes, it took me a month to save up a buck. These days our kids would look at us like we didn’t exist if we offered them less than twenty five dollars a week. Plus we are expected to foot the bill for their Android phones on top of it. Does any other parent relate to this?
We can’t blame our teenagers for the fact the cost of doing everything has escalated wildly since we were living under our parents’ roofs. But we still can’t ignore the need to teach them how to handle their money responsibly. There’s a lot we can do for them, even before they begin to earn their own living.
As the online financial magazine CNN Money states, “Any 4-year-old knows where their parents get money – the ATM, of course.” That’s ok – you can still teach your kid the basics of managing their money so that by the time they are young adults, they have acquired sound financial habits.
Start them out by getting them to pay for items you purchase so they get the concept of exchange. This is where you can help them improve their mathematical skills and show them how to count money. Next time you go to the grocery store, have them hand the money to the cashier and take the change. Eventually they’ll get a feel for the amount of cash needed for certain items.
When you are confident they are ready to step it up a notch, give them a set amount of cash and have them start purchasing their own lunch, books, toys, etc. and recording it in a ledger. They’ll see where the money goes and learn to make decisions about their budget.
When they are wise enough to manage a weekly allowance without your intervention, teach them about investment. It’s fine for them to receive the allowance in exchange for doing certain chores around the house, but give them activities to encourage their entrepreneurial minds. Help them set up the infamous lemonade stand. Take them to City Hall to learn about vending permits. Show them how to determine their startup costs and sales strategies for earning a fair profit on their efforts.
We have already seen in the past few decades that job security is a false illusion. Begin early to prepare your kids for a future that allows them to be resourceful and effective.
More from this contributor:
The Gut-Wrenching Business of Firing an Employee
Daily Candy is Sweet for Small Businesses
Young Entrepreneurs: Budgeting for a Small Business Startup