There are 3 simple, yet important foundations that we can teach our children at a very young age about money. Regardless of how money comes and goes in our lives it can always be allocated into 3 main categories: give, save, and spend. When you think about those three categories you realize that you are either fully aware money is transacting like this at all times, or you soon realize how frivolous you are being with your own thoughts on money.
It is important to acknowledge your money and give it value. And the best time to start teaching this philosophy is as soon as possible!
Let me give you an honest example. In my latter parenting years, I have become one of those parents who believe in compensating my children for chores and other household projects. I didn’t always believe in this teaching, however. When I was a single mom raising my youngest child who is now 16, I pretty much catered to her every need. I served her decorative breakfast, lunch and dinner plates then collected the mess when she was done. I would yell, “Clean your room!,” only to come in 10 minutes later and find her watching TV. I would then retreat to cleaning the entire room. I picked out her clothes, helped her get dressed (yeah I know, insane!). How I came to do this without blinking was easy. I loved my daughter, I didn’t mind doing it, and I simply thought by doing these things that I was showing her how much I was a caring mother.
Little did I realize – what I was doing was setting her up for laziness, entitlement and lack of responsibility. But how would she ever learn to not only take care of herself, but also humble herself to helping others? As a parent, it can be hard to go from taking care of your child’s every need to wanting them take on more responsibilities. The later you start your child down the road of having less responsibility around the house, the harder it becomes for both of you to correct the behavior later. Thinking back, I don’t beat myself up about it. When you start knowing better, you start doing better. I promised myself with my next two children that I was not heading down that long road again.
As soon as my youngest turned 5 and my middle child turned 7, my husband and I were introduced to an audio book teaching that inspired us so much that we wanted all of our children to learn this simple lesson of being responsible with their money. It’s called Smart Money Smart Kids by Dave Ramsey. This audiobook has not only changed my life and how my children perceive chores and saving money, but their maturity has grown by leaps and bounds. Who thought that yelling “go clean your room” would be met with fast runs upstairs to see who can get there first?!
Before I get into greater detail on what we do in our household, here is some background on Dave Ramsey’s course. Dave Ramsey is a dad best known for starting a course for adults called Financial Peace University. It is an awesome course for any income level or educational background. Just be ready to live like no one else, so you can live like no one else when stepping into it! Along with allocating your income and giving every dollar a name, Dave was soon inspired to create the same idea for his growing children. Here is his take on “commissioning your children:’ We never gave our children an allowance because I don’t like the word. We gave our kids a commission. Commission is, “Work, get paid. Don’t work, don’t get paid.” It’s kind of like the real world. Allowance sounds like welfare to me. I just don’t like the word. Words are powerful. You have to be careful with them. We called ours commissions, and if you didn’t do your work, by the way, you didn’t get paid. That’s how this works.
After listening to the audiobook Smart Money Smart Kids, my husband and I anxiously got started. To make it fun we had the girls decorate envelopes and later as the envelopes got full, switched the money into jars and so forth. As we had the girls label each envelope and jar with give, save, and spend they understood that for every dollar earned, it would go into one of the allocated areas. They further understood what they would be compensated for each chore and that some jobs would be worth a dollar (i.e. washing dishes), some would be worth a quarter (i.e. feeding the pets), and that some chores did not warrant any money (i.e. putting your dish in the sink).
You will have fun creatively coming up with your own pay scale and chore list as a family. Don’t forget – it is necessary to clearly lay out all house rules because children will try to get over on you. Here are some of our amazing results so far:
We are into about 3 months dedication with implementing Smart Money Smart Kids. Our daughters age 5 and 7 have saved enough money to purchase their first big splurge – an Android tablet. And yes, they diligently have earned every hardworking penny.
My daughter’s recently gave a small donation to a special cause of their choosing.
Spending has taken on such fun experience for the girls. We go to either the dollar tree or five below and mommy and daddy no longer reach in their pocket. Toys and little trinkets no longer are just carelessly thrown or lost right away. The kids seem to be proud and take more pride in their purchases.
This process can continue to repeat itself throughout childhood, teenage years and into adulthood. As the children get older, it’s a great opportunity to introduce investments and making their own money to give, save and spend with.
In case you are wondering about my 16 year old, well of course it’s not easy to get her to comply as the young ones have. However, we are taking her passion for art and making it into her own business. From that she is able to give, spend, and save. And, yes she does try to keep up with her room and other household chores, lol. Good luck all!!
Dave Ramsey has a plethora of courses or audiobooks to choose from. You can find out more information here