Parenting advice to help kids learn money management during the holidays to have a brighter future
REALITY CHECK: A recent survey found that fewer than half of parents surveyed said they teach their 11 to 14-year-olds how to keep track of their expenses or set a budget.
A recent report from the Organisation for Economic Co-Operation and Development (OECD) suggests that too many American teens lack some of the basic financial skills required to survive and thrive in the working world. Of the 15 countries participating in the Programme for International Student Assessment (PISA), America ranked seventh-well behind first-place China, just behind Australia, and just ahead of Poland.
So, be honest…
Do you often feel like you are your kid’s ATM machine?
Does your child spend faster than he saves?
Do you worry that you’ll still be delving out an allowance to your child when he is forty-five year old?
If so, you’re not alone. (Really! Truly!)
Some of parents’ biggest concerns center around their kids’ inabilities to handle money, and it is a legitimate worry. How a child learns to save and spend in those early years has enormous impact on his future success.
Research also shows we’re not doing such a good job in teaching our kids basic money management skills.
The truth is we can begin to teach our children money management skills as early as three and four years of age. Those lessons will take a bit more patience and persistence, but learning positive spending habits and good money management skills are crucial for life. And that’s exactly why we must parent for this kind of change. and there is no time better than the holidays.
7 Tips to Teach Holiday Money Management
Here are tips from The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries to help your child learn good money management habits now to give him a more financially secure future later.
1. Be a good role model
If you always are overdrawn, why expect your son set a budget? If you buy clothes impulsively why should you expect your daughter to wait for the sale? If you don’t talk about the value of money, don’t think your child is ever going to learn that money doesn’t grow on trees. So be the model of money management you want your kids to copy. They are watching. Use the holidays to show how you wait for that buy or look for the best deal.
2. Monitor that TV consumption
Television probably wields the greatest influence on fueling kids’ spending urges, and commercials are relentless in trying to get kids to buy, buy, buy. So limit your child’s exposure to commercials by minimizing his TV viewing. Beware: the holidays are prime times for those commercials urging your kid to spend, spend, spend. Public television, while not strictly commercial-free, offers quality programs with much less advertising. Consider it. Or at least please have some serious chats about media literacy.
3. Use real-life examples
Take your child to work. Show your daughter how you balance your checkbook. Explain how you are setting up a list of what you plan to buy for the holidays before you walk into the story. Talk to your son how your credit rating is checked before purchasing that car. Show your kids the household bills so they know how much electricity, gas, water, phone and cable cost. You don’t need to reveal your income or savings but you should use real opportunities to help your child understand money. Look for those everyday examples to demonstrate smart spending habits.
4. Give an allowance
One of the best ways for kids to learn to manage money and keep a budget is by giving allowances. How much to give depends on your child’s spending habits and maturity, and your comfort level. But the keys to allowance success are these: Set a certain amount. Explain to your child what the allowance will cover (such as school lunches, movie tickets, makeup, and birthday gifts for friends or just nonessentials). Pay regularly at the same time and amount each week. And don’t bail them out!
5. Encourage savings
Most kids are impulsive and want to spend, spend, spend. Our job is to teach them to save, save, save. So help kids fight their spending urges and learn how.
For instance: Make a rule that a portion of his allowance goes to a charity his choice.
Or the piggy bank must be filled or weigh a certain amount before money is spent.
Or open a saving account for an older child where she can monitor her money just as in the real world.
It’s not too late to start right now to open up that Holiday Savings Account with your child. She may not have enough saved for every family member but she will for just one present for one special someone.
6. Keep a spending log
From the time your child can write and count, give him some kind of a simple recording book to keep track of his money.
A young child can track his earnings (including holiday money gifts); an older child can record his earnings and expenses.
Gradually explain the “break-even point” so your older child begins to learn the necessary skills for balancing a checkbook, keeping a savings account and maintaining a budget.
The holidays are a perfect time for your child to start a spending log on a limited scale.
Just show your child how to keep a log for just a few weeks and track her spending. The lesson can be enlightening!
7. Encourage an entrepreneurial spirit
Help you child set up that lemonade stand. Encourage him to print flyers that say he’ll mow the neighbors’ lawns or walk the neighbor’s dog. Your child can learn from a young age that how you earn money is through hard work. Not only will you encourage your little entrepreneur but you’ll also help him appreciate the value of money.
Dr. Michele Borba, Parenting Expert
Follow me on twitter @MicheleBorba,
For more parenting advice subscribe to my daily blog, Dr. Borba’s Reality Check or find dozens of proven research-based parenting solutions in my book, The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries.
Resource for this blog: Survey of parents by the American Savings Education Council in Washington, D.C. S. Garland, “Mom, I Need Money!” Parents, May 2002, p. 193-194.