(This is part of Take Charge of Your Money, a partnership between INQUIRER.net and Citibank to help readers handle their personal finances well.)
Question: I have two kids ages 8 and 9. Because times are hard, I?d like to instill in them the right attitude toward money. It is my hope that they will grow up financially responsible. How can I teach them well? ? Marissa
Answer: It is never too early to teach children how to handle money. The ?tween? years, those years sandwiched between the preschool and teenage years, are a very good time to start teaching kids the right values. Parents should do it not just because times are hard. In good times and bad, being financially independent can be a big boon.
In the primary grade school years now (and even in preschool, in some schools), children are already taught money lessons. They are introduced to the denominations of bills and coins circulating, and are given opportunities to ?transact? with play money in the classroom. With play money, math lessons in addition and subtraction are applied, and children learn what happens when they ?buy? something with their play money ? the amount of money on their hands decreases, but they gain something tangible in return.
Given this situation, money may not be that abstract a concept to tweens. Do not think that children will not be able to handle money responsibly at this age. While talk of credit cards may not be warranted yet at this time, you can discuss being responsible for paying for goods and services contracted, for saving for one?s future, for giving to others, and for spending well.
Here are tips in teaching your tweens about money:
1. Agree with your husband on what to teach. If both of you believe that saving is important, then this is a key lesson to teach the kids. Commit to talk to your kids about it, whether separately or together.
2. Give your kids a money baon or daily allowance. Having money in their own hands will help kids learn and apply money lessons well. If you are sending them off to school in the morning with food from home for recess and lunch, give a little amount of money they can spend (or save) as they please.
3. Talk to your kids about budgeting their baon. There are three things kids can do with baon money: save, spend, and give. They can choose to save all, or save some; spend all, spend some, or not spend at all; and give all or give some money away. Tell your kids that if they spend all of their money, they won?t be able to have some extra money tomorrow in case their baon for tomorrow won?t be enough for something they want. Give kids a general guideline such as: Save 10 percent, give 10 percent, and spend 80 percent. You may change the percentage in accordance with what is comfortable to you. The important thing is to teach your kids to spend within limits.
4. Stress the importance of saving. Tell your kids what savings are for ? in the future, they will have a fund to dip into in case they really need it. Then advise them to save at least 10 percent of their baon money. If you give them P10 a day, they have to put away P1 in a coin bank. Then make a big deal out of their money growing every day so they will get the point.
5. Have them open their own savings account. When their coin bank becomes full, take your kids to the bank so they can open their own savings accounts, with you as the ?manager? of the account (the account will be named: ?Your name ITF (in trust for) Your Child? or ?Your Child By Your Name.? It would be good if you will get passbook savings accounts so your children can see with their own eyes how interest can make their money grow over time.
6. Shop and spend wisely. If they need something for school, take them with you to the mall or to the supermarket so they can learn how to compare prices. Between Pencil A and Pencil B, for instance, show which one is cheaper by pointing out the price tags. Tell them brand names are not that important if both items do what they?re supposed to do. Besides, brand names just cost more money. Then you can say that with the money saved by choosing the cheaper pencil, your family will have more savings which you can spend on ice cream, for instance. The next time they need something, let them choose the item based on price. As you said, times are hard these days.
7. Show what is a ?need? from a ?want.? At their ages, kids may want many new things such as toys, gadgets, bags, pencil cases, and so much more. When they ask you to buy them something, ask them: ?Do you really need it?? Tell them what qualifies as a need: your priorities such as groceries, and food baon for recess and lunch, for instance. Inform them that the family will buy the needs first, then after that, you will evaluate if non-needs can be bought. Imparting this lesson will help your children curb impulse buying later on.
8. Teach them to give. There are many people in need who may not be as fortunate as your family is. Take the time to teach your children to be generous. From their savings, encourage them to put some money in the coin banks for charity organizations displayed in the counters of shops in the malls. Or encourage them to give money to the church themselves when you go on Sundays.
These basic lessons will go a long way in helping your children to be financially responsible.
(INQUIRER.net and Citibank invite readers to ask questions regarding financial matters. Send your questions to personal_finance@inquirer.net or comment through our personal finance blog called MoneySmarts)
*Disclaimer: Readers are solely responsible for their own investment decisions and should thus conduct their own research and due diligence and obtain professional advice. INQUIRER.net will not be liable for any loss or damage caused by a reader's reliance on information obtained from our web site. INQUIRER.net receives no compensation of any kind from companies or industries or funds that are mentioned here.
Related Site:
Citibank
