One of the best life lessons my parents taught me was the value of a dollar.
From a very young age, I had a comprehensive concept of budgeting, savings, spending and prioritizing. Although there were a lot of methods my folks used to teach, the simple mantra from my father was “put money in your kid’s hands early.”
They figured out what they spent on me annually and put that money in my control. By the time I was ten years old, I was responsible to pay for everything (school clothes, hockey registration, entertainment-everything.) There was a limit on the money I had, and this forced me to really understand what things cost.
The cool shoes became less important, when I realized they ate up half my school clothes budget (besides they would go on sale in October, so I could wait until then to snag them). My parents let me fail and make stupid purchases-better to do this at 15 than 30! They gave me support and advice, but the money was mine.
I am sure if I suddenly didn’t want to be active and play sports and just spent my money on candy and toys, they would have stepped in. However, the great thing is my mind had developed to create a sense of responsibility, self worth and self-reliance. The result, I made the right choices more often than not.
I am a strong believer that children can handle money concepts and teaching needs to start early. Financial literacy is not something that can easily be learned in your twenties or beyond. A good first step is to set up a pay plan. By 4 or 5 years old, a child can earn money with chores and then learn how to use this money.
With my own young children, we have a chore/good human chart and weekly allowance. Chores are just part of helping as a member of a household, but acknowledge effort and kindness is also important (so go ahead and expand the chore chart idea). From this allowance, a portion goes into spending (living), a portion into savings and a portion for charity (giving).
The savings portion goes into their own bank accounts. The spending portion is fine to be in a piggy bank (and if they want to buy a fidget spinner, or save it to purchase a Lego set, so be it). The charity portion allows them to develop a great sense of humanitarian responsibility and actively choose where they want to contribute.
It may sound cliché, but kids are the future and it is our responsibility to ensure they are prepared.