10 Money Tips for Kids

I wouldn't call these "tips" so much as dissertations, but it's no nonsense advice well worth the read.  Plus, the non-American English is fun to read.

http://www.iol.co.za/business/personal-finance/financial-planning/financial/10-money-tips-for-kids-1.1105208

Allowance and Kids: Teaching the Value of Money

This article from Linsey Knerl at ParentingSquad.com offers a unique and interesting twist on how she solved a problem with how her daughter perceived the value of money.  What a great perspective!  The article is shown below....

When my daughter was just six, we began giving her allowance. At the time, I’ll admit that my rationale was a little flawed. She had been helping out with baby diapers, clearing the table, outside chores, laundry, and gopher tasks for almost a year. She enjoyed helping out, but the guilt that I was overworking her took hold. An allowance seemed like the proper way to reward her for her efforts.

A Problem Begins - While she didn’t receive more than a couple of dollars a week, she never wanted to spend it. She would save and save, overflowing her piggy bank and consuming her thoughts. She would often come to the dinner table, counting her money or bragging to us how much she had saved over the past few months.

She would never spend it. There wasn’t much that she wanted. We didn’t have a very large budget for entertainment or novelties, so we knew that it wasn’t because we were overindulging her. She just wasn’t that interested in buying things. I guess I should have been grateful. Then I noticed she quit working as hard.

Chores started to slack around eight years old. When threatened with a decrease in allowance, she responded with a “That’s OK. I have enough money. I really don’t need anymore.” Because she didn’t need money, it didn’t have value. It was a simple dilemma. I hate to say this, but for a moment I was actually disappointed that we weren’t a little more commercialized. If my daughter ever saw something that she wanted, she may have drawn a connection to the power that money could have for her. So I decided to “help her out” a bit.

Our Solution - We devised a movie night. The kids weren’t expected to pay for the movie, but if they wanted candy during the show, they needed to buy it themselves. My daughter loosened the grip on her piggy back and threw in about 50 cents towards the candy stock. Next, I started finding some really great songs for download off the internet. She would beg for her own copy of the songs on a CD for her room. “That will cost you,” I replied. She handed over 50 cents for the cost of a blank CD and $2 more for some extra downloads from her favorite movie soundtrack.

Soon she realized that there was a value to the green stuff wadded up in the bottom of her piggy bank, sock drawer, little pink purse, and anywhere else she could stash it. Money equaled stuff. While at six years old stuff didn’t mean so much, at eight, it was starting to have some worth. We took time to explain what discretionary spending was. We worked out a formula for all future piggy bank deposits to ensure adequate amounts for saving, spending, and sharing. Our daughter was getting excited again.

It Really Works - Chores started picking up. In fact, she started asking for extrachores. Soon she was taking on odd jobs for family, including scooping walks, dog walking, and simple cleaning chores. My daughter was becoming an entrepreneur at nine years old.

What does this all mean for you and your family? It's a simple lesson: Children won't manage money well if they don't value it. Whether the problem is hording cash or overspending, there needs to be a firm foundation for establishing a fair value for the dollar in your home. Starting young and keeping at it can give your child a chance at the best possible financial future!

Banking Choices

Here's a link to a nice list of national banks and the resources they offer for kids who are learning to save.  If you don't see your bank listed, give them a call!

Ideas that Encourage Saving

Below is a great article we found on About.com.  It was written by Madison DuPaix.  You can see the original article here, but we've copied the high points below.  She offers some really great ideas for encouraging saving and helping parents talk to their kids in ways they will understand.

Match Savings

For every dollar your child saves, offer to put in a matching contribution.  When they are little, you might be able to match 100%.  Once they are older 25% or 50% might be reasonable to encourage them to save.

Open a Savings Account

Encourage him to deposit a portion of money he earns into a savings account and track the interest earned on his account.

Encourage Them to Set Goals

If they want to purchase an expensive toy, hang up a drawing of an empty thermometer. As they save their money, color in the thermometer. They'll be able to track their progress visually.

Give Non-monetary Savings Rewards

Young children may not understand that $10 tomorrow is better than $5 today. Consider rewarding children with things special to them for saving their money: stickers, toys, and special outings can be helpful.

Make a Wish List

Encourage children to identify fun things to spend their money on. For older children, prioritizing the list can be a helpful challenge.

Display a Picture

Hang a picture of a wanted item off their wish list on the wall. If your child is saving for a special purchase, hang up a picture to remind them of what they are working towards.

Save Money in Front of Your Children

Keep your own piggy bank or deposit money in the bank when you are with your children. Explain what you are saving for and your children will mimic your behavior.

Help Them Spend Money

Occasionally, children will get so focused on saving their money, that they won't spend any money along the way. Help them enjoy their money by spending some on small purchases or surprising them by buying something they'd like.

We're Gonna S-A-V-E!

One of the hardest things for anyone to learn is that sometimes we cannot always have the things we want when we want them -- especially things that we buy.  Plus, important things like new bikes, a special toy, or tickets to a concert can often seem expensive and out of reach to kids.  Below is a neat little video we found that is great for younger kids that teaches about saving.  If your Moonjar user is in first, second, or third grade this would be a great way to start talking about saving.

Chores and the Moonjar

The chore chart for one of our kiddos.

Here's a quick update on how we have used the Moonjar to learn some basics about the relationship between work and reward.  Instead of spending the summer grumbling at one another about how and when chores get done, we decided to put it down on paper and link it back to the basics of our Moonjar project.  Here's what our family is doing.

1.) All chores are posted (left).  Each kid has her own sheet with age appropriate things they can do to help around the house. 

2.) Each one of our kids (age 8 and 12) start out with a balance of $5.00 at the beginning of each week.

2.) The chores above the squiggly line are mandatory if they want to keep all of their $5.00. These tasks have to be completed by evening of each day.  We explained "mandatory" like this: these are things you do to show your appreciation for the privilege of being in a family and having a home.  If all the mandatory boxes are checked at the end of the week, they get to keep all of their $5.00.

2a.) For each box unchecked (a daily chore not completed), we deduct $0.25 from their balance.

3.) Everything below the squiggly line is optional.  These are jobs that - frankly - will make mommy and daddy's life a little easier.  The kids can choose to do these if they want to earn extra money toward something they are saving for, for extra spending cash, or to share with others.

4.) Payday is on Sunday night, when the money is deposited into the Moonjar and we total things up.  We try to take some time to talk about how things went that week, what was hard, what was easy, what they will change for next week, and so on.  This has proven to be a great time to let the kids talk about how they are going to use their earnings.  Probably the biggest learning moment has been when there's been a big difference in pay.  This is where we don't really have to say much.  The lesson about work and reward just teaches itself. 

How are things going for you?