Seven Ways to Raise Kids Who Can Hold onto Money

Here are seven ways to raise kids who can hold onto money from Money Central :

• Teach even the youngest children the difference between needs and wants.
• Let your children make money decisions from an early age. 
• Give your child an attractive alternative to spending...and motivation to save!
• Make sure your child understands the connection between work, paychecks and taxes.
• Never give up on trying to teach kids about the cost of credit.
• When the age is right, encourage your child to get some work experience.
• Teach your child about investments.

These are good tips in my opinion -- especially points one and five.

It's funny how different kids react to money differently (thus creating a need to emphasize different aspects of money as you're teaching them). Our son would cut off his right hand for $5 while our daughter is not motivated in the least by money -- in fact, she gives a lot of it away.

An illustration about her: I have been trying to get my daughter to wear her hair with bangs because I think it looks better, but she has insisted on pulling her hair back (since many of the older girls wear it that way). So I tried to bribe her with cash. No deal. Then my wife said, "She's not motivated by money, she wants your TIME." So I offered to take her out to lunch at her favorite place, just the two of us, if she wore bangs. Done deal! The rest was simple negotiation, and since this is my business and she didn't know any better, I took advantage of her -- and got her to commit to wearing the bangs for a YEAR. Then, when she wanted to change the agreement to allow her to wear her hair pulled back on her birthday, I got another MONTH of bang-wear out of her. Oh the joys of "teaching" kids about money. ;-)

Comments

[Phillip]

This is a good article... just a couple of comments.

I motivate my daughter to save by matching her savings once she reaches a set amount. Right now she is 9, and every time she saves $100 I match her another $100 if she will put the $200 in the bank. She gets $5 a week in allowance, so it takes some sacrafice on her part. She buys a lot less "stuff" now because she realizes it cuts into her goals.

I have also opened up an Emigrant Direct account for her so she can see the interest every month.

The only thing not on the list that I would add is to teach kids about giving. My daughter gives 10% to church every week. I have to remind her sometimes, but often she does it on her own - warms a dad's heart!

[Duane Gran]

I recently played the board game "Life" with some friends and their 5 year-old son and was pleasantly surprised at how many money lessons are taught in the game. I've never played Kioyosaki's "Cash Flow" but I've heard good things about it as well, but I believe that games can be useful to model real-world lessons.

[M]

This post included in the Carnival of the Vanities, at http://www.cigarintel.com/agency/archives/000832.php

[Jo]

My brother and his wife, especially his wife, are really good a money management in my opinion. Anyway, this year for x-mas they gave all three of our young nephews a "piggy" bank that was divided between Save, Spend, and Share (I think those were the categories), plus money. It seemed like a great idea. Even though I think the banks were lost on the kids (they're 2, 3, and 5). But I think it is a great idea to start them with some consciousness about money even when they are so young. I hope my siblings take the banks seriously and help their sons use them.

We also have a tradition in our family it seems to give saving bonds to the godchildren for birthdays. By nephews will definitely have more money by the time they are 18 than I did.

Phillip, I am glad to see that your daughter gives to the church. As someone who works for a church it is hard to teach people once they are older that the church needs them to give in order for it to continue to offer services. Plus, it instills in people at a young age that everything they have comes from the Lord and they should give back to the Lord when they can.