It is noble and good to teach your children that money cannot buy happiness. It is also noble and good to teach them enough about the value of money to empower them to succeed at whatever they choose to do in life. Here are some tips to help you teach your children the value of money.
- Provide a modest allowance. Giving your children a small weekly or monthly allowance that they can spend as they wish will help them learn the value of money. If your wallet is always open for them, they’ll never appreciate what it means to budget or save.
- Let them buy their own Xboxes. You will likely shower your kids with toys and gifts as they grow, many of which have genuine health benefits—like bicycles, skateboards or skis. There will be some things along the way that you and your children may disagree in its appeal, like a video gaming system. These are valuable opportunities to teach your kids about money. Let them save their allowance and work for the money to buy what they want. If you hire them to do chores, be sure not to pay them more than the neighbors would pay—they goal is to teach them the value of money and if you cheapen it, they will!
- Encourage them to make donations to charity. If you expose your children to genuine poverty and help them see how a small amount of their money can make a difference for someone who is struggling, it will help them not only appreciate the value of money, but adopt a kind and generous attitude.
- Help them open a bank account. As soon as your children are ready, help them open a bank account. Then, they can begin to earn interest and understand how the financial system works. Don’t do it before they are eight years old. They won’t be able to understand the concept of a bank holding their money. Don’t wait past their twelfth birthday since teenagers have a dangerous ability to dismiss and ignore their parents. Do it while you have maximum influence and they are ready to learn. Make sure they learn how to make deposits and withdrawals all on their own.
- Involve them with college savings. Even though your kids should contribute to their college education expenses, most parents recognize that the high cost of college effectively puts this burden on the parents. Open an account for each of your children and make contributions to each one equitably. Show them how their fund is growing—and how it compares to the cost of the education they want. Don’t put this money in their name unless you have extraordinarily high confidence in their judgment. You’d hate to see the college fund become a beautiful new car for high school or a frozen banana stand on the beach after high school graduation.