10 Things to Teach Children Before Giving an Allowance

They come to you asking for the next new video gaming system. They want the toy they keep seeing on television commercials and all you can say is, “Children, I don't have the money right now maybe next time.” Why not say, “You can buy it. Save your money.” Teaching children about money doesn't have to be difficult.

One. Display all coins and dollar bills so that children can see and touch them.

Sometimes we are spending cash or using debit and credit cards so frequently that the children never see nor feel the money. Without seeing the money or lack thereof, how can they appreciate it? Show them what each coin represents. Let them experience feelings of disappointment when money runs out. Provide them with a history lesson. Share with children the different ways people use money including: collecting, saving, and investing it.

Two. Interview the children to find out what they already know about money.

Do they know how money is made? Where it comes from? What do they like most about money? What do they like least?

Three. Provide them with word problems.

Give out money problems and challenge them to find solutions. For instance, there is a pack of gum at one store for one price and the same pack of gum is on sale at another store, which one will they choose and why? If there's a set amount of money for them to spend on their favorite items, teach them how to budget.

Four. Point out sale signs and show them how to use coupons.

Familiarize children with the savings they can take advantage of when buying simple things like gum, a magazine, toys and other fun things. They will be glad to get change back from those large bills that mom and dad give!

Five. Purchase a fun-looking savings bank and/or cash register with play money.

Toys like these help further educate children on the value of money. Pretend like you are a customer and your child is a cashier. Ask questions about your purchase and explain to them what each dollar and coin represents.

Six. Take them to the bank with you and/or show them what a bank account looks like (preferably one you have set aside for them.)

When you are taking the time to show them where money goes when you receive it and how you allocate your dollars, you are teaching them once again that money is not meant to be wasted and that each dollar has a purpose.

Seven. Teach them how to shop around.

Show them how much money they stand to lose if they were to shop for the same toy elsewhere. Once children understand the concept of money, they will not want to lose money, but gain more of it. When you show them that they can find a favorite item elsewhere for a bargain, not only will they learn a thing or two, but they will remind you to shop around too in the future.

Eight. Play game about managing money.

Children love games; so when you present them with a fun way to manage money, they will be more likely to remember simple concepts and later teach others.

Nine. Borrow money from them.

Periodically ask them for money and watch their response. Offer to pay them extra from the trouble. Teach them the pros and cons of lending someone money.

Ten. Show them why it isn't a good idea to gamble hard-earned money on games you are least likely to win.

Scratch-offs on the ground, old raffle tickets, and other games that consumers rarely win will also be a good teaching tool for your children. Point out that this is all money wasted on the ground. Explain to them that more times people lose than win when gambling money. Provide examples of the many people who are poor as a result of gambling money; rather than saving it. Avoid focusing on those who won by chance.

Lastly, after you have showed your children the value of money, create an allowance system. Start off with simple tasks and small payments for tasks completed. Then gradually increase pay as tasks become more challenging for them. Post a sign somewhere within your home for all to see displaying what the tasks are and how much they will be paid when they perform them. Make them responsible for keeping track of the chores they have completed. The sign could look similar to a time sheet—a great way to prepare them for a job one day where they will have to keep track of their own work hours and breaks.

When you take the time to teach children the basics about spending and saving money, you will help them grow up to be responsible with their money.

By Nicholl McGuire

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