Want to grow a fiscally responsible child? Check out Financial Foundations’ series of children’s books designed to teach kids just how much FUN MONEY CAN BE! Created by Tammy Johnston of The Financial Guides.
Every parent wants their children to grow up to be financially responsible. They want them to be able to look after themselves, achieve the Canadian dream of homeownership and financial security. The big question that the parent’s have is not what, but HOW? Unfortunately financial responsibility and literacy is not something that is taught in school. It is a task that falls under the area of parenting.
Children and adults learn best when they actually get to deal with things themselves. The same is true for learning about money. I am a huge supporter of giving children an allowance and teaching them to divide it into six categories: Financial Freedom, Education, Long Term Savings for Spending, Charity, Gifts, and Play. If a child is not given parameters to work within they will spend everything, have very little if anything to show for it, and learn nothing in the process.
My twelve year old daughter gets an allowance of $12 a week. To make it simple for her to understand we give her six twoonies. I have used paying her allowance as an opportunity to teach her about money and fractions for years. Now she is finishing grade six and has a strong grasp of the basic skills needed for money management.
Princess likes to ask me about the jars and we spend time discussing their different purposes. Investing is a concept she is starting to better understand as we’ve been discussing it for the past few years. I have explained to her that each dollar is a money seed and her job is to plant the money seed in such a way that it can grow and produce lots of fruit. The education jar is used to buy books of her choosing from the Scholastic Flyer she gets at school, but Mommy does make suggestions. The charity jar is for things like purchasing toys as gifts for the less fortunate at Christmas, donating to an international entrepreneur through Kiva, or giving to the fundraising drives they have at her school. For Long Term Savings for Spending she is saving for spending money for our trip to Disneyland. The Gift jar is used to buy birthday and Christmas presents for her friends and family. The last jar is her play jar and every month she gets to take her money out, put it in her very own purse, and go shopping with Mommy. Her last purchase was a robotic spider she fell in love with at Discovery Hut. If she wants to buy candy or trinkets at the dollar store I do not interfere. It is her money to do with however she chooses.
Whenever she is deciding to spend the money in any of her jars, I make her physically count out the money and hand it over. I ask her questions like, “Do you want to spend all of this money on this one thing or in this one place?” Kids can be impulsive, so we need to help them slow down a bit and think through their actions. We are not giving them the answers, but helping them figure out what questions they need to ask themselves.
Children are much smarter than we sometimes give them credit for. By providing them with the opportunity to make decisions, ask questions, and deal with financial consequences they learn to make better decisions. The earlier you start teaching them the better, but whatever age they are take the opportunity to help them grow into financially responsible adults.
“The more your kids feel the allowance is fair, the more likely they’ll think before they spend. Giving your child the experience of spending his own money is empowering.” – Jim Gallo
Click here to order your set of the Financial Foundations Children’s Books!
Article written by Tammy Johnston