G2: Advanced Techniques for Teaching Your Kids the Value of Money

8.30.2006 Advanced Techniques for Teaching Your Kids the Value of
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Advanced Techniques for Teaching Your Kids the Value of Money

Teaching your children the value of money is perhaps one of the most
important life lessons you will bestow on them. Most parents give
their kids an allowance and many give their children a chance to earn
extra money by doing chores around the house. Both are good ideas for
helping your kids learn to handle money. To make your efforts even
more effective, here is some advanced G2 to help your kids develop a
responsible attitude toward money.



Budgets You Fund, But Kids Control: Many parents choose to pick up the
bill for basics like back to school clothes. That’s all good, but
starting at about 7 years old (through high school), you should
consider a slightly different approach. Instead of just taking your
child shopping and picking up the bill, get them involved in making
choices about how to spend a fixed amount of money. A great way to do
this is to give them a fixed budget of say $200. Show them a detailed
list of how you determined that $200 was the correct amount of money.
Then let them make their own choices. If they choose to buy a $50 pair
of jeans instead of the $20 Target pair you budgeted for, they will be
forced to compromise on something else. The whole point here is to get
them to understand that spending money involves choices.

Forced Savings: Learning to save is an obvious key to financial
success. At G2, we recommend that kids be forced to save 50% of their
money. We realize this sounds very harsh. However, if a child can
learn to save 50% now, think how easy it will be for them to save 10%
as adults. One very easy way to get kids to save 50% of their money is
to double their allowance. That may seem counter intuitive, but it’s
just a classic example of outsmarting the kids. The goal is to get
them to save…to develop the habit…the discipline….it doesn’t matter
whether it is $2 or $20 a week. Do this for a year and you will be
amazed at how excited your children are about their growing nest egg.



What ideas have worked for you in helping your kids learn the value of
a buck? Share your own G2 with us and other readers, by posting your
comments.
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