Teaching Kids The Value of Money

      How do you teach kids the value of money?  That is a question I have asked myself over and over again, and I still don't know the right answer!?  I have so many questions: Should I give my kids an allowance, if so how often?  Should I tie the allowance to good grades or doing chores?  What is the appropriate amount of money I should give?  My questions go on and on ...

      Teaching financial responsibility is hard!  I honestly don't remember my parents teaching me how to handle money, and that's probably why I've been so bad at it through the years!  I've had to learn through trial and error how important it is to have these skills, and I want to teach my kids what I have come to learn.  Ultimately, the lessons I want to instill is that all money is limited and they will be best off if they learn to put a little thought into how they use it.  And secondly, I want them to get into the habit of saving and paying their tithing.  So over the past couple of months I have spent some time re-evaluating our current allowance system to see if it's really working to help us reach our goals, or not.  These are the questions I had to ask myself:      

1.  Defining Allowance - Should I give allowance and why?

      I think that kids should get an allowance.  Should it be tied towards their work performance?  I say no.  This idea is a change from my previous way of thinking.  In the past I tied allowance towards work performance and I found myself getting frustrated way too often when they would do a lousy job at their chores.  Plus I feel that it's my boys' responsibility to help around the house because they are a part of our family and we should all contribute.  And secondly, I feel that if I make one contingent on the other, I'm taking the chance that they will choose to forego the cash in favor of not doing their chores. And the whole purpose of giving them allowance is for them to learn how to handle money.  So changing my expectations on what allowance is was my first step.     

2.  How Much and How Often?

      I have always struggled with how much money to give as an allowance.  In the past I chose to give both Austin & Cameron $10 a month and Andrew (being much younger) $5 a month.  The reoccurring problem I found was the fact that the kids really didn't have enough money to buy anything useful.   Because after putting aside 20% (10% savings & 10% tithing) they were only left with a few dollars, enough to shop at the Dollar Store.  So re-visiting the dollar amount needed to be done. 

      I read that when it comes to an allowance, it should never be so great that kids can buy what ever they want, or so small that they can't make some money decisions.  And most experts recommend that children get $1 per year of age, per week, for an allowance.  So they recommend my 11 yr. old should get $11 per week, equaling $44 a month.  To me, that is TOO much!  I can't afford that.  I do, however, like the concept of $1 per year of age, but I am choosing to do it bi-weekly instead.  That is definitely more affordable with my 3 kids and it will allow them to have some decent money to work with.      

3.  Allow Spending Freedom?

      This is the hardest part for Spencer and I.  When you turn over your hard earned money you want your kids to appreciate it, and value it, and most of the time they just don't!  And it can be so irritating!!  But I think it needs to happen.  Controlling how they spend their money teaches them that strings are attached and that the money really isn't theirs.  I think we need to allow our boys to make spending decisions, both good and poor, and then encourage a discussion of pros and cons before more spending takes place.  Oh we still caution and offer our advice, but we are trying to do it with a no-strings attached attitude, and it's not always easy!!!

      The hardest part about parenting is trying to learn as you go and testing what may, or may not, work.  I am definitely not an expert, but I'm trying, and this new system seems to be a good fit for us, but I love learning from other people!  With that said, I would love to know how you are teaching your kids the value of money.  What things are you doing with your kids to encourage good habits?  Please feel free to share your thoughts and ideas with me!