Financial Friday: Teaching Your Kids About Money Management

While my parents and I are at odds over some of their parenting techniques, there is one thing I cannot deny that they got 100% right. (No parent is perfect so don’t beat yourself up, Mom and Dad.) I believe that they were right about teaching my sister and I how to handle money.

How to Teach Your Kids Money Management
Photo credit: theritters / Foter / CC BY

What did they do? Starting when each of us understood basic math and what values different coins and bills had, they started giving us an allowance. At the beginning, it we received a small weekly allowance which covered just enough to eat school lunches everyday plus maybe $2. Then, one dollar always went to our savings account and the other extra dollar went to a charity account. At the end of each year, we each decided what charity we wanted our money to go to. As for the leftover allowance, we had to decide whether we were going to make our own lunches (for free) or buy them. My parents didn’t pay for any wants for us beyond birthdays and the holidays. So, any toy we wanted we either had to wait for a big event, or save up to buy ourselves.

There were two approaches to getting money for our wants. One, we could always make our lunches or two, we could make more income by doing extra things around the house. I know for a while I was making a penny for every dandelion I pulled in the backyard and a nickel for every thistle. I think my dad quickly learned that I would be good at negotiating prices when I was doing a job he hated, but that is a story for another time.

As we grew older, our allowance did as well, but so did our responsibilities. By high school, I was responsible for lunches, clothes, and any youth group activities. The percentages that went to charity and savings also stayed the same. So, the $1 I put away a week in elementary school was now about $3-$4. I think I also received a yearly budget for school supplies that I had to work with. By this method, I was taught how to budget in order to maintain the lifestyle I wanted.

Now, my sister and I are very different people. When there was something she wanted, she would cut back on all spending possible. When there was something I wanted, I would cut back a little on my spending, but I also took full advantage of the extra work opportunities. It is definitely different methods, but it taught us the same thing: how to make a budget and stick to it.

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About Danielle Beranek

Life can get away from you when being young, married, and still fairly fresh out of college. Taking on a pet, student loans, going back to school, and soon a new house is enough to leave ones head spinning. For me, life is crazy, but only on the outside.
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