Children and Money

" Mommy (spoken beseechingly) buy this toy or food for me. I need it now!!! (spoken demandingly). I know you have heard these requests, demands and soundbites; what do you plan to do to teach your children about money and how to develop sound money habits early in their lives?

You and with a close Mom-friend, spouse or significant other can begin to plan sound money habits and it is never to early in your child's life to begin teaching your children. You can begin by giving allowance so your children learn natural consequences of using money. Allowance affords a hands-on, direct approach to the use of money that words can't teach. You need a show and tell.

When does allowance begin?  Here's a positive plan I have used through the years of working with children and families. I read some educational books on money and children by Neale Godfrey, noted author of seventeen books such as "Money Doesn't Grow on Trees: A Parent's Guide to Raising Financially Responsible Children" and "Ultimate Kids Money Book" and a great CD-ROM called "Money Town" for children from Pre-K through High School. Ms. Godfrey, the chairperson of the "Children's Financial Network, Inc.", is an educator whose mission is to educate children and their parents aboout money. She Has been working in this field for over 30 years and is a pioneer in confronting money issues and improving life skills in a curiculum called LIFE,INC.: The Ultimate Career Guide for Young People which serves over one million middle and high school students.

The plan is simple - give allowance weekly, on the same day, by paying your children $1.00 each week for each year of how old they are. Begin the process at age 4; read on because you and your child/ren wil learn how to place the allowance in specific jars or chambers in "Money Savvy Generation's Chambered Piggy Bank". This Piggy bank comes with 3 or 4 chambered compartments (or use 3 jars or storage containers and label) or buy the "Money Savvy Pig". These compartments are labeled "Spending, Saving and Charity and this teaches children how to save, spend and donate. If you want to add a 4th. jar, it can be labeled Future Planning (Investing). Remember to give your young child his/her allowance in quarters and dimes so they can be enabled to divide the coins and learn their importance.

Your child/ren will divide (with your help) his/her allowance into these 3 containers on a weekly basis. Only the SPENDING jar can be used to by something and parents can add rules in this area. If you don't permit allowance to be spent on sweets, your child must abide with family values. They will learn as weeks go by that "I can buy it, if I can afford it". This encourages saving spending money for something special and affordable.

"Savings" are future desires that are hopefully attainable within 2-3 months for your youngest child and they will learn patience and happy anticipation; older chilldren may develop long range goals for their spending money. "Donation/Charity" has been shown to help children grow into their lives thinking about less fortuante people and donating to a cause. Charity is about helping others and projects that need help.

Money skills MUST be taught to kids by age 4. The "4 Money Lessons for Children to Master" by Sheyna Steiner for Bankrate.com are a must to be completed before sending your child to College !  #1 Learning how to budget #2. Making and dealing with spending decisions, #3 Understanding the rewards of work and # 4 delaying of gratification.

Another educator in the field of children and money is Greg Karp, author of "The 1-2-3 Money Plan: The 3 Most Important Steps to Saving and Spending Smart".. He recommends breaking allowance money down into 3 components. Greg says: "I give my kids 3 Tupperware-type containers. One is labeld "save", one is labeled"spend" and one is labeled "give" and the "giving" is taken to Church or Synagogue or their School Classrooms for caring project.s This is Greg's philosophy.

This allowance is not given for "attainments" - eg: chores, grades or behavior. It is given as an expectable component that should be given the same day every week to develop expectations for the future when a paycheck will be anticipated.

I hope this review gave you a background to build money-smart kids and to eradicate poor money skills. Please take time to peruse the recommended books and create a money plan that refects your family values with a weekly allowance plan by age/amount given for your children. Good luck on impacting your children's future as financially savvy chidlren, teens and adults.