Teaching Your Child Financial Literacy = Money in the Bank
Allowance is a gratifying way to give your kids hands-on experience handling money in a low-risk way. Just handing your children the occasional $5 isn’t going to ensure their money management skills grow. Set up systems that build good habits. The library can help.
At a recent program, kids got a taste of Gary Paulsen’s fiction funny, Flat Broke. They left with “banks” in hand and information on how to do better than the main character in Paulsen’s story. Here are some of the financial lessons kids learned.
Work together to create a chore chart. In my home, we have a chore list that is a mix of quick/time consuming, old/new, daily/weekly, and fun/dreaded. My son gets to pick what work he wants to do chore-wise, but the amount required is such that it means he will have to put in a little effort each day, and he’ll have to stretch past his comfort level. If he doesn’t get his required marks, he doesn’t get paid. Download and print this chore chart (pdf).
Decide how to handle earnings. At home my son uses a three-part bank. One part is marked for SPENDING, one for SAVING, and one for GIVING. His weekly allowance is divvied out at $2 to spend, $2 to save and $1 to give each week. He decides when and how to use his money (with a little guidance). When he doesn’t have enough for something he wants, he saves up or goes without. He chooses his charities and gets to feel the reward of seeing his work and savings have a reach beyond him. He is learning price comparison and deal comparison skills—even when choosing candy. (Any systems used should fit your family, your child, and your overall budget.)
Ask a librarian. There are many resources available at your library to get you and your kids started. Pick up Flat Broke, search our online catalog or ask a librarian for help. It’s never too early to expose your child to the foundation of financial literacy.