kids and money

You have a powerful opportunity as a parent to teach your kids about money management by allowing them to have or earn some. I noticed in "One For The Money" that Elder Ballard stated, "Much has been said over the years about children and monthly allowances, and opinions and recommendations vary greatly. I’m from the “old school.” I believe children should earn their money needs through service and appropriate chores. . . I think it is unfortunate for a child to grow up in a home where the seed is planted in the child’s mind that there is a family money tree that automatically drops “green stuff” once a week or once a month."

We used to give our kids an allowance until I read this quote and it made sense to me. So, we've been transitioning away from giving an outright allowance. Instead my kids do all of their chores for the whole month before I'll pay up. We also have made sure that they have responsibilities in our family that are not tied to money. We do this so they'll understand the importance of working together to benefit the family (without expecting financial compensation).

Remember that your example is the most powerful teacher. If you tell your kids to manage their money carefully, but then they see you spending recklessly, they'll remember what you do more than what you said.

Here are some of the ways our family handles kids and money:

*Budgeting - Label jars and help kids to separate their earnings into tithing, savings, fun, mission, etc. We did this until our kids were around eight years old.

*Bank Skills - Let your kids open a checking account in a "family" bank. Mom and dad control deposits and withdraws and help kids to learn how to record these on a bank sheet. This works better than the jars with older kids and higher volumes of money. This also teaches about balancing a check book. My kids still keep a tithing jar/envelope.

*No Credit - We don't EVER allow our kids to buy on credit (or a promise that they'll pay us back) even if they're sure that they'll have enough money "tomorrow." We emphasize that if they'll have the money tomorrow, then they can wait until tomorrow. If they do have enough money in their "account" they can use the Mom bank to withdraw money and spend it.

*Work Opportunities -Post extra jobs (and money amounts) on a steel door, fridge, or magnetic board. Kids can move the job/amount under their name as they complete the jobs. I pay my kids for these extra jobs twice a month. (I printed a bunch of "job" words onto cardstock, mounted them on magnetic paper and covered with strips of packing tape. Then I cut them into small words. See picture above.)

*Encourage Saving - Help kids save to a certain amount/goal and then match. My oldest saved up for 2/3 of the cost of a wii, we paid for the rest. This was his first big financial goal. I was pleased to help him get rewarded for patience and saving. I intend to offer a dollar for dollar match for all money that goes towards educational or mission savings.

*Money Incentives - Give money for good grades or other goals. We set up an incentive for one of my boys who was struggling with turning in assignments. Because we wanted drastic results, we offered $5 if all of his assignments were turned in each Wednesday. He's made drastic improvements, earned some money and we're gradually going to reduce this incentive. My parents gave us $5 for each "A" grade.

*Family Councils - We involve our kids as we discuss financial priorities. They help us determine things such a family vacation locations based on how small/large our budget is. We're also pretty honest about our current financial situation. My kids know about our family savings account (and why they don't have finished bedrooms in the basement).

This is a great website with more great ideas:
http://life.familyeducation.com/money-and-kids/personal-finance/34481.html

[I'd love to hear your ideas. Please comment and share how you teach your kids about money.]