How will you teach the lesson of `money management` to your kids?
Published by admin on Tagged Question of the week Question of the week:
Question of the week is yet another effort by the debtcc team to enhance the community knowledge bank. It’s a weekly contest and every week a challenging question will be thrown before the members for responses. The best answer will be chosen collectively at the end of the week by the debtcc members and the admin panel of the site. The winner of this contest will receive a handsome reward of a $50.
The purpose behind this idea is to encourage the members to share their real life experiences in dealing with the financial challenges.
Though different financial issues are being discussed across the debtcc board, but it doesn’t leave much scope to the members to share their personal experiences. Here is the place where it can be done, and also that the new members can get the innovative ideas to deal with their debts along with the conventional ones.
Question 2: How will you teach the lesson of `money management` to your kids?
We may all agree that the kids should start getting the lesson of ‘money management’ at their early age in order to lead a debt free life in future. But how will you teach them the effective ways of managing money?
Winner Post
Answer 1: I started with my kids early. I made them earn their allowance. I did a chore chart and gave each chore a dollar amount and everything they did that chore, they put their initials by that chore. At the end of the week, I would add up how much they earned and gave them that amount of money. If they ask to borrow money for something they want, they have to pay it back and I keep a talley of how much they owe me and how much they have paid back. There have been times they have wanted something and I have asked them how much money they had, if they say none, then they are informed that they have to save up for it. Each child has a savings account and when they gotten “paid”, I have tried to sit down with them and have make a list of what they want want as to how they need to situate their money, so much for savings, so much for this or so much for that, etc. When I put mu son on my car insurance, he was told that he had to pay his portion (he had a part time job). He didnt like it because it seemed like he didnt have very much money left, but he learned that if he spent it all right after he got paid, he would not have anything left and he could not do some of the things he wanted to do. If he didnt charge his phone up (he had Virgin Mobile), he didnt have a phone to use. A lot of people have not agreed with me about this and think that I needed to just give my kids an allowance, but felt it was better for them to earn it for they would appreicate it more. Also many have not agreed with me that if they ask to borrow money that I make them pay it back. I have always told them that we have to work for our money and do not just get handed it for doing nothing and that they had responsibilites also and that we were not going to just hand them money, they had to earn it. They also have learned the value of the dollar by learning how to budget their money and when they run out, they run out and cannot do anything or get anything. They have learned that you dont get something for nothing, although once in a while mom will do a little something for them. Told them to consider that a bonus. LOL My son got his first job at 16 and worked part-time. My daughter wants to get one soon also and I do not have a problem with that, as long as school work is kept up. I have also discouraged them from using credit cards. They also know kind of what our financial situation is and have seen us struggle, and in one way, I feel that it lets them see how hard things can be sometimes and to prepare for it so they dont make the same mistakes we did. I encourage them to save as much as they can.
Answer Posted by |2nband
The other answers worth mentioning are:
Answer 2: First of all, my children earn their money by doing odd jobs around the house. When we have a garage sale, they have their own little area to sell their own things. I am trying to teach them, that if they want something bad enough, they need to save the money first. My son will usually take 1/2 the money he makes and put it toward something he wants, and he puts the other 1/2 in a savings account for something he may want later. I am hoping that this will help them learn to manage money when they are older.
Answer Posted by |strangclan
Answer 3: I think one of the best ways to teach kids money management is by creating a systematic allowance system which mimics real life economy.
For example, I think think it is very important that the allowance is “earned” by doing chores/special projects, etc. This way, they are learning that you have to work for your money (it doesnt just appear out of thin air). Also important is that allowance money is needed. I intend to pay for for all essentials of my child, but to budget extras such as “special toys”, gifts for family members, treats from the icecream truck, etc. in their allowance money. This way, from a very young age they will be used to budgeting their money. If I pay for every special treat my child wants, their money will not mean much to them. I would much rather pay my child a generous allowance (based on work ethic) and have them make financial mistakes as kids instead of as adults.
Another important part of their allowance includes a mandatory budget. I had a friend growing up who received allowance every week. Each week 10% of her earnings went to church, 10% went to savings and the rest she could spend however she wished. Imagine practicing putting 10% of your income in the bank since you are 5 or 6 years old.
I also intend to teach my children about money by recycling toys. If my child wants a brand new toy, I will tell him/her that I will buy it for them if they will give to charity an old toy they no longer use. I will also take them to garage sales, thrift shops, etc. and emphasize how fun it is and what treasures we have found. Instead of throwing something old out, I will try to make a game as to how we can use it for something else?
Lastly, I will model for my childen how to maintain a budget and be honest with them as they grow up about my financial problems early on. When I see someone who is homeless or if we volunteer at a shelter, I will take the time to explain to them how sometimes good people mess up with their money and it takes some time for them to get back on their feet. *I also plan to educate them on investing (as soon as I learn more myself. *As they enter college and get a car, etc. I plan to put their name on my credit card and to teach them how to use credit for one central thing (such as gas) and pay it off each month. Their name being on my card will also allow them to start life with a high credit score and several years of credit history.
Answer Posted by |luv2laugh
Answer 4: I have made many mistakes in managing my own financial affairs throughout my life, but I am making sure my kids understand how to handle money, credit and all related issues:
-we sit down and discuss the months bills and how much income we have coming into the house every month. This way, they understand when I say “eating out is not in the budget this week”, and they understand exactly why - instead of just saying “we cant afford it” and not giving them an explanation.
-each child has a minor savings account with our credit union, and when they earn money by doing work for their grandparents, or I am able to give them a little money for helping me with a special project around the house, they put part of it into their savings - even if its only $1.00 or $2.00 - every little bit adds up, and we sit down with their savings account statement every month when it comes in the mail, and I show them where they have earned interest on their deposits.
-I use THIS SITE to educate my kids on credit and payday loans, and what can happen if you misuse your credit or take out paydyay loans. I have showed them the horror stories of the illegal payday lenders and what they do to peoples lives. Ive shown them an online calculator and had them add up purchases theyd like to make - and then said, “ok, if you made these purchases on a credit card, with, say, just 9% interest, this is how much you would repay for those purchases”. Then we take it one step further and I tell them “uh oh! You just got injured and cant work for 3 months - meaning you cant pay your credit card bill for 3 months - your interest rate just jumped up to 21%! This is how much you will pay for those purchases NOW…” Weve done the same things with payday loans, using the “rollover fee” that many of them charge. This site is a fantastic resource for teaching your kids about credit, debt and payday loans.
-I try to teach by example. My kids have seen me, as a single parent, struggle, fall, get behind on bills and have to deal with the consequences, and pull myself back up and start all over again. Theyve seen me have to borrow from family to make it through the week or month, or to put gas in the car to get to work. BUT….theyve also seen me repay those debts (sometimes slowly, but always paid in full!), and theyve seen me make phone calls to creditors in an effort to make a payment arrangement - not ignore them and allow them to start collection proceedings.
Hope this info helps! 
Answer Posted by |SUEBEEHONEY70
Answer 5: What I currently do:
1. I never let my children borrow money to buy things they cant afford.
2. Both my children receive an allowance and I encourage them to put some of that allowance into a savings account.
3. I talk with my children all the time about how credit cards work and how the companys are not their friends.
4. But most importantly, I model how I would like my children to use money.
Answer Posted by |spatterson_40
Answer 6: In order for kids to understand debt and money they have to live it. I have two pre-teens and my problem was, “Mom can I have 10 for this or 20 dollars for that”. They hadnt a clue the value of money (as most kids dont)That was my problem.
This was my solution:
Instead of paying them an allowance for chores etc, I put them on a time card system. I agreed to pay them 8 dollars per hour for the work that they did around the house. That sounds like a lot of money but if you figure the dishes got done in 10 mintes the laundry in 15, and real solid hours worth of work, a lot gets done. First off that eliminated the money they ask me for here and there. They get paid on payday, the same payday that I do, and we keep the time cards on the kitchen fridge.
Inevitably they allways need to “borrow” because payday is not for a few days (sound familiar) Well then what I do is reduce their hourly rate from 8 per hour to 4 per hour until that debt is paid off. They dont like it but they wanted the money early, and it will cost them.
A couple of things have happened since I have implemented this.
1: My house is immaculate!
2: I dont hand out money from my wallet anymore, ever!
3: They are learning the basic rule, If you cant pay cash you cant afford it, and if you have to borrow it will cost you.
I can tell them over and over the importance of money management but at 12 and 13, they couldnt care less what I say, its the REAL LIFE consequences that they respond to and its working.
To do this with your kids, you NEED time cards and a set payday. And you have to be firm and consistent.
Answer Posted by |Joanna
Answer 7: Well, the first thing that comes to mind is allowances–my parents paid me a certain amount for chores, and helped me open a savings account. One good thing that I got out of my childhood was helping my mom out with her annual garage sale! I learned quickly about the value of a dollar(which stretched further 30 years ago than today)
Helping your child set up a budget with their earnings can be rewarding and even fun at times! And when they purchase items with their own money, they tend to cherish it and take care of it much better, knowing that they worked so hard to obtain it!
I think parents should be somewhat more open about their finances with their children(at least when they are mature enough to understand). Involving and educating your children using your household budget once they are old enough can really prepare them for their finances once they are out on their own. And they will appreciate you for it.
Answer Posted by |saxy_soprano
Answer 8: The number one way to teach your children or any child is by “EXAMPLE”. What you do they mimic to the letter so please set a good example by Saving your money, spending it wisely in front of them, talking about money in senseable manners and most of all “RESPECT” your moeny!!
Thank You
Answer Posted by |Lukeskywalker
Answer 9: Ive developed a payment schedule that is assigned to each household chore, instead of a “blanket” allowance. I have the younger two pick pictures of items they would like to have, including the price, from store advertisements. My older child is more aware of what her activities cost. They then have an opportunity to earn money towards their purchases by picking items off of the chore list. At the rnd of the week I total their balance. Half of the balance must be deposited in to their savings accounts, which we opened with christmas money, and the other half can be spent or save toward their wish list items. I think that this helps my kids see the value in hard work and also how quickly money disappears when “blown”! We also have a rule that half of “gift money” will also be deposited to the savings accounts.
Answer Posted by |angell
Answer 10: I think the best way to teach at a young age is lesson learned. When a parent starts to give a child money, they should explain to them the value of money and parents should have the child sit down with them when they pay their bills. This way the child will see how much the parent makes, how much goes toward each bill and what the parent has left over for the week. Tell the child that this does not mean that the left over money is not to spend as they want.
After a few months, start to give them an allowance. Take the child to the toy store and see how they respond and ask them if they want to buy anything. If they spend all of their money and a few days later they want something, such as ice cream or a candy bar, tell them they should have managed their money better. Buy the child a small box for them to keep their money in. Instead of handing the money to the child every week, put it in the box for them. Go to the bank and get some withdrawal slips and give them to the child. Also get a small notebook for the to keep track of how much money they have. When they need money, have them fill out a slip and deduct it from the notebook.
If they overdraft send debt collection letters to them. Just kidding.
Answer Posted by |pokertramp
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