How to Share Good Financial Principles with Your Children: As Told by an Accountant and a Penny Saver's Daughter - Part Three
July 15, 2019
This is the last piece of our mini series on how to incorproate good financial well being and habits in young kids. The first two focused on saving, spending and now giving back. Many individuals give back to charities and local organiztions through out the year. We all give back for different reasons, all having some personal reason close to our heart.
How can I get my child involved in giving back? Most young kids love giving gifts to loved ones and friends and being able to see the joy that their gift, no matter the size, shape, color or appearance brings to the recipient. Note: faking appreciation after receiving a handmade craft that is supposed to be a drawing of the whole family, but really just looks like the dog upchucked the Crayon box has a big impact on little kids. Strengthen this love of giving back by encouraging them to set money aside for these gifts. Coax older children to set money aside to be donated to an organization of their choice. Let them look into what their chosen organization does with the donation and how it helps others. Being able to see or understand what their contribution does can make giving back a lot easier to form into a habit.
FUN TIP: Provide each child with three different jars. The jars can be decorated or labeled in three different colors. Have each jar represent a different principle of personal finance one for saving, spending and giving. When it is time to pay allowances discuss what is a good amount is to put in each jar that way kiddos can form the habit of automatically putting money aside for savings and giving while also leaving some for spending.
As told by an accountant and a penny saver's daughter: When I was in high school, I won a drawing for a significant sized gift card to a local general store. I held on to the card for a couple weeks contemplating what I was going to spend it on. I thought of the new Purple iPod Nano that I had been wanting, the gobs of makeup I would be able to get and even the number of Funyun bags and 2 Liters of Pepsi. My mother suggested donating one of the gift cards to the church youth group I was a part of at the time. We were planning a Mission trip for the summer and the initial price per person was a little steep for some of the youth families. I donated one gift card anonymously with much reluctance. I kept thinking of the items that I wouldn’t be able to buy and enjoy with the money I had just given away. The youth continued to raise money and received various donations from church, family and community members to help fund the mission trip. With the various donations and fundraisers. It wasn’t until closer to the trip I realized just how much that gift card and the other donations helped bring down the cost of each participant, allowing more youth and young adults the opportunity to go. I don’t know the exact impact that one gift card had but it did something and that’s all that matters. Show your kids, the impact of giving back because there is no impact too small.
Tid Bits from an accountant and a penny savers daughter:
- Make an allowance a reasonable value. If an allowance is to too big then there is no lesson on the value of money and saving. Also, a dollar a week goes no where after you get to middle school. Increase it according to age and responsibility. If a raise isn’t an option, then encourage chores or additional tasks around the house for additional money.
- Start a student checking account for your high school or working middle schooler. Most student accounts allow for an adult to have access to help monitor and promote healthy spending and saving habits. DON’T BAIL THEM OUT IF THEY OVERDRAFT. This is never going to show them the importance of safe spending and budgeting.
- Talk about goals when it comes to saving. Share what your saving goals are as a parent and an adult and what steps you are taking to reach them.
- Teach your kids what you wished you had known at their age.
- Encourage the phrase “If you want to use your own money, then you can buy it.” This tends to cause children to think and ponder on if what they are wanting is really that important or not.
- Pay with cash. Get your children involved in handing money to the register clerks when running errands. It’s harder to hand over a couple crisp $20s than it is to swipe a credit card, let your children learn this same gut feeling too.
- Talk about the family finances openly in front of your kids on a regular basis. Yes, do let them know that asking strangers how much they make can be rude, but don’t encourage your children to shy away from the topic of money or personal finance goals.
Everyone’s understanding of personal finance must start somewhere. I encourage that parents take the time to talk openly about their finances, don’t keep it a taboo topic for dinner time, share your spending, saving and giving habits with your kids. Encourage them to spend, save and give what they have earned. The more comfortable your children are with money, the smarter the decisions they are going to make later on. Start now.