 Have you ever wondered whether your children think money does indeed grow on trees? Probably, every time you turn around your wallet is being attacked by the "gimme's". Just examine honestly your spending habits (and those of your kids), and realize that you have not given them any reason believe that you don't have a money tree. Generally, we all want things and kids are no different. Find out how easy it is to whip out the credit card(s) and instantly gratify our desires. Get to know what message we are sending our kids.
Read about how we can instill in our children a better understanding of money and how it works.
Establish a Savings Account and a Plan
It is a good idea for your child to have his own savings account even if it is just a piggy bank. Establishing a savings plan is a must, whether your child receives an allowance or works a job. Embolden your child to donate a certain amount to charity (to help them develop a lifelong habit of helping others). Then try to establish a certain percentage for long-term savings (such as college) and short-term savings (such as clothes, toys, etc.).
It will be a good idea to saving for both long- and short-term goals, it will build a child's confidence in her ability to save and helps her learn delayed gratification. Finally, once the savings goal has been met, she may even discover that the money would be better spent for something else.
Allot a small percentage for discretionary spending. You will find that the following percentages work well: 10% charity, 50% long-term savings, 30% short-term savings, 10% spending. Try to find a balance that works well for you.
Hold a Bill-Paying Night
This is a good activity to demonstrate your school-age children where your money goes. You might even learn a bit yourself first, assemble a list of your monthly and/or weekly expenses and their amounts. The amounts don't have to be exact. You can write the expenses and their amounts on separate slips of paper. After that, add up your monthly income and use pretend money (Monopoly money or make your own) to represent the amount.
Then, take the expense slips and give them to your children. Ask them come to you and "collect their bill" one expense at a time. This is a perfect visual representation of how quickly the paychecks get depleted. After that, discuss ways you can cut your spending to help stretch the paychecks for things that are really important. Probably, you will be really surprised at your children's input.
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