Statistics show that the very first place children learn about money is where (or with whom) they spend most of their time with—their parents. They learn how to view money, how to spend money and the importance of money, not just by listening to what their parents say about money, but observing what their parents do with their money.
Courtesy of dollarphotoclub.com
As parents, subconsciously we show our children what is really important to us with our actions and not just our words. For example, waiting in line for hours at Foot Locker for a $300 pair of Jordans rather than spending that same $300 to pay for our child’s past due tuition tells our children (without words) that looking good is more important than doing well (getting a good education).
I had great role models growing up. My parents kept debt slim to none. We always had a home and we knew how to give. How did we know? By watching our parents. (Side note: I also learned, however, how to sneak new clothes into the house without making our father aware, but that is “neither here nor there” LOL)
Needless to say, actions speak louder than words and our actions have been our financial demise for generations.
So to ensure my children do not make the same mistakes my husband and I made as college students and as young adults, we are making a conscious effort to teach them how to handle money.
So what are we doing?
- We allow them to “earn” a commission (or allowance). Our boys have an opportunity to receive $1/day if (and only if) they complete their daily chores. No chores, no money. Every 15 days, we tally up the number of days they completed their chores during that 15-day period and they get their dollar for each day. So if they did their chores each day, they receive $15 from us. For us, we believe it teaches them that in order to receive income, you have to earn income.
- We set-up a “Give, Save, Spend” piggy bank (actually they are three oversize plastic bottles that we purchased from Dollar Tree). They take the amount they receive on payday and divide it by three—1/3 goes into their Give bank, 1/3 goes into their Save bank, and 1/3 goes into their Spend bank. We give them their commission/allowance in dollars so we can actually count and divide the amounts up by three. This not only teaches them how to deal with numbers, but it teaches them how to manage money and how to give and save before they spend.
- Lastly, unbeknownst to us, in teaching them how to earn, give, save, and then spend money, they learned (on their own) the Power of Partnership. They learned to put their “spend” money together to buy something they both wanted (i.e. video games) that they could not have individually purchased on their own. Partnership at its finest!!!
So although, as parents, we made tons of awful financial decisions in the early years of our children’s lives, I pray that our new personal financial actions trump those of our past. So now, not only are our words speaking loud and clear, but our actions are cementing those efforts.
What financial habits are your children learning from you? What actions can you change to ensure their financial future look even better than your own?