We all want to bring up kids who have drive and ambition. No one wants to raise entitled and frivolous spenders who feel that they should have whatever they want- and even worse, that someone else should get it for them.
So when it comes to giving our kids money, we walk a tightrope. On one hand, we don’t want to be the parent who says no all the time, making kids feel greedy for wanting things or deprived for not having them. Then again, we don’t want to get parenting wrong and end up raising money grubbing children who think we have bottomless purses ready to meet their every whim.
There’s a balance where you give your kids money but still manage to impart its importance. After all, we are part of a culture that is centered around consumption and our children make observations about money from a young age. It is, therefore, crucial to teach our kids the basics of personal finance early on in order to make them good stewards of their future finances.
Here are 5 tips on how you can use the money to raise financially savvy kids:
- Give them an allowance and use it as a teaching tool. Giving kids an allowance is a great way to teach them about money. Don’t tie allowances to chores though because this encourages your children to get rewarded for something they should do anyway. Instead, get their entrepreneurial juices flowing by finding creative ways to give them bonuses like asking them to find and solve other household or neighborhood problems e.g. washing people’s cars or walking dogs.
- Teach them to save, spend or give. Have your children split their allowance into three jars labeled “spend”, “save” and “give” to teach them the basics of financial management. Spending money will help them learn prudence in stretching a dollar while saving for future purchases teaches patience. Giving, on its part, is all about generosity and sharing with others.
- Let your kids make autonomous spending decisions. Allow your kids to decide how to use their allowance and don’t bail them out when they mess up. The lessons they learn from the mistakes they make -like blowing all their cash on frivolous items- will teach them the importance of frugality. Besides, you’d rather they make these mistakes now when there aren’t any serious consequences than later on in their lives.
- Give back as a family. Get your kid’s opinion and input when allocating your charity budget. This makes them realize how good it feels to give back to the community. They’ll also come to see sharing as a normal part of life and be more generous as a result.
- Make your kids accountable. Freedom without responsibility is dangerous, especially where finances are concerned. To teach your kids this, ensure they pay from their own savings for things they lose (library books, jackets, stationery etc.) or damage.
Lastly, don’t be afraid to tell your kids no if need be. Remember it’s not your job to make your kids like you but it’s your job to turn them into responsible, independent adults who can make sound financial decisions.