Kids and Money

I recently discovered a great website, MomTV. They show live shows on various topics where the moderator has a webcam and invites others to join either with webcams or with in the chat room.

I recently caught Vicki Hoefle's show, "Your Family, Your Solutions." Vicki is a mom to 5 kids. Some are out of the house and others are in high school. On July 14, she had an amazing show on how to teach your children about money. I would encourage you to watch it, but it seems they have been having techincal difficulties with recording that particular night's show.

Here are the main points:

-Start giving your kids money as soon as they stop putting it in the mouths (age 3ish).
-Give the allowance as $1 per year of life. 3 year olds get $3 per week, 4 year olds get $4 per week. This will eliminate the "Please buy it for me mommy!" arguments while you're shopping.
-Allow them to save some, spend some, and give some away.
-Don't withhold due to behavior or chores. Always give it to them so they can learn how to manage it.
-Watch your child squander it the first several weeks. In time he/she will learn that money has power and if it is saved it will go further.
-Don't hold their money for them. Make them responsible. If they leave it somewhere, put it in a vacation jar for the family. This teaches responsibility.
-Make a family rule that for every penny spent on candy/soda, a penny must be put aside for the dentist because mom and dad don't pay for cavities.
-When your child is old enough to handle their money well, get them an ATM card. (The bank will say they don't do it for kids, but they will if you press them.) This starts teaching them about credit without causing damage. (After all, they watch you whip out the debit card all the time!)
-When your child hits age 12, cut allowance in half. Make them earn the other half each week. This teaches work ethic.
-When your child reaches age 14, cut allowance completely. Now it is time for them to seek out ways to earn their own income.
-For children who have expensive tastes in clothing, tell them what the family contribution will be. Anything above that will be up to them to cover. Ex: Our family offers $30 toward sneakers. If you want something more expensive than that, you can cover the extra cost.
-Tell your children early on that you do not lend money to people you love as it causes problems. Teaching this to your child at age 3, 4, and 5 will prevent them from asking for large sums of money when they are older. They know the family rule.

There are so many other gems in this webscast that I have not captured here and Vicki does a much better job at explaining how this works. She also gives great examples of exactly what to say to your child to help them learn about managing the money they are given.

While I don't always have the same opinions and beliefs as Vicki, I love her idea of teaching kids about money. We are still a bit off from that with String Bean, but I'm seriously considering implementing this method in the future.