Teaching Kids How to Handle Money

Teacking Your Kids How to Handle Money

Yesterday, Dawn over at By Sun and Candlelight wrote a great post about Kids, Money and Chores. She asked the following questions:

” 1. Do you give your children an allowance, and if so, must they earn it by doing chores?

2. How do your children handle their money – deciding what to spend, save, and give?

3. Do your children have jobs outside the home?”

Great questions, no? I posted my answer over at Dawn’s blog, but I wanted to do so here as well for two reasons: 1. I can give a more comprehensive answer; and 2. I’d love to hear my readers (that would be you!) handle this topic with their children.

In my answer to Dawn’s first question I stated that we don’t give allowance – not exactly, anyway. Nor do we connect doing chores with getting paid – in a way. We kind of combine the two. There are certain chores that Andrew has to do (without pay) just because he is part of our family. These chores include making his bed, keeping his room clean, picking up after himself, putting his laundry away, setting the table before meals and helping to clear the table afterwards.

When those chores are done, and done well, then he can do other chores that he gets paid for. These chores include helping with the garden, sweeping or vacuuming the floor, dusting, or whatever else he and I come up with. The cost for each chore depends on the time and difficulty of a particular chore. What makes this different from an allowance is that he gets paid for the chore the same day, and not weekly. Sometimes he gets paid immediately after the chore and sometimes at the end of the day.

The reason we do this is because, well, it works for us! Andrew is only 7 (so obviously #3 is taken care of, he doesn’t work out of the home) and he likes the immediate reward of getting his money right away. He gets his money and makes a big deal out of counting the money (homeschool activity) and putting it in the band. When he gets older we will be switching to a weekly payment – with a twist (taking out “taxes” – more on that in a future post).

How does Andrew handle his money? We follow a system similar to Dave Ramsey. Andrew has three banks. Part of his money goes into a bank for saving, part of it goes into a bank for giving and the rest goes into a bank for spending or short-term saving. (Either this week or next I’ll do a post showing how this works.)

Our biggest challenge in teaching Andrew how to handle money is being consistent. I’m the frugal one in the family and Michael is for sure the spender – although he is MUCH better now of the last few years than ever before. We’ve done the Financial Peace University program and learned tons from it. We are doing our best to follow the principles laid out in the program. We’ve struggled, are struggling, financially but we are working on getting debt free and following the system the best we can. We want to teach Andrew by example and we want him to develop good money habits NOW while he is still young.

How are you teaching your kids how to handle money? Do you have a system in place or just ‘winging it”? How would you answer the above three questions? Leave your response in the comments.

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Comments

  1. This is very interesting. It makes me think not so much b/c of the money issue, but because of the there’s-too-much-for-Mommy-to-keep-up-with issue, which has really hit hard this week. It’s so hard to teach chores, but so important. Just this week I’ve started using the phrase “families help each other” in order to try to get the kids to help. It is tough going with a 3 year old and a 5 year old who in many ways is still a 3-year-old. This week I’ve been wondering if I’m going to make it through young childhood.
    Kathleen Basi…recently posted…Confounded by a Primary Composition NotebookMy Profile

  2. Carol, I wrote about how I was raised and the budget my dad established with each of us kids in this post: http://www.sufferingwithjoy.com/2012/02/14/growing-up-accountable/.

    It’s interesting that you’re doing with Andrew what my parents did with us kids: certain things are givens and other things are for earning money. A very important principle.
    Barb…recently posted…Sunday Snippets – A Catholic CarnivalMy Profile

    • SimpleCatholic says:

      I had forgotten about your post, Barb! It’s a good lesson!

      I kind of wish I had this plan (save, give, spend) when I was growing up, although my parents did the best they knew how! We definitely had to earn our spending money. 🙂

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