Money Management - Start 'Em Young & Train 'Em Right!
My mother taught me so much when I was growing up. She shared her morals and values with me and because of her I’ve grown into the woman, wife & mother I am today. However, there was only one thing she never talked to me about --- finances.
It seems that even the birds and the bees took precedence over money when I was growing up. No one talked about this. When a child asked mom or dad about saving and budgeting, they were more often than not told “Don’t worry about that” or “It is none of your business.”
As a result, I have had to learn a lot of lessons on my own. I am lucky that I am currently debt free and on the path to financial independence. However, looking back, I can’t help but wonder where I would be if I had started my financial education earlier than age 35.
It also makes me realize the importance of teaching our children about money and saving. I want them to understand the dangers of debt and to learn patience. I don’t want them to make the same mistakes I have made – isn’t that what we strive for as parents?
I am an avid follower of Dave Ramsey. He has a lot of great ideas and principles that he teaches. I have adapted some of them into our life style, but some, I have created from my own devices and discussions with my husband.
We have 3 children. Our family has decided to begin our children’s financial education at age 6. This means we will begin with our daughter this coming September. However, we have done our homework and are getting ready so we know what we want to do when the time comes.
So, will she get an allowance? Well – sort of. She will earn money for doing things around the house. However, it won’t be for the things that are “required” in order to be a member of this family. She will have to make her bed, clean her room, pick up her toys and help with the dishes. These are tasks that won’t earn her a penny.
When you are in a family – you have responsibilities. Just as I clean the house, do the laundry and make dinner – without pay – my children have to contribute as well. So, what are allowance makers? We are working out the details, but here is a short list:
1. Setting the dinner table.
2. Feeding the dog.
3. Helping her brother and sister with their chores.
4. Initiating clean up (family room or other rooms).
5. Helping with dusting / vacuuming.
We will make a chart to help her remember what earns money. Then, when she does these things, she can place an “X” on her chart and at the end of the week, we will pay her the predetermined amount per chore. This will, of course, differ from child to child for us and we will change it accordingly.
The one thing we will teach her immediately is that every dollar she makes, she has to put into her piggy bank. We don’t want her to rush and spend everything she earns, so we will slowly talk about saving, giving and spending. Then, by the time she is 12 years old, we can easily help her migrate into her own envelope system.
Since we currently do this ourselves, this system will not be a new concept to her. What it will help her learn to do is to divide her earnings into Save, Spend & Give. Since she has already learned about putting all of her money into her piggy bank, it should be an easy transition into having the cash in envelopes. This helps her see what she has available and she can also keep track of the running totals herself. She can also easily save for that big purchase and know that when her money is gone – it is gone. The “Bank of Mom & Dad” doesn’t give loans.
When she is 16 years old, we will introduce the checking account. By this age, she will hopefully be able to get a part-time job and begin to earn money outside of the home. She will still have her envelopes and pay for most things in cash, but it is important that she learns how to manage her money with a bank as well. She needs to learn about overdrafts and the proper way to balance her checkbook – BEFORE she heads off to college.
At this same age, we hope to implement a “M&D Matching Program.” What we will do is match her dollar for dollar for every one she saves towards her first vehicle – up to a predetermined amount. We don’t “owe” her a car to get around. If she wants one, she has to earn it herself. This is actually one of the concepts that Dave Ramsey discusses.
Our goal as parents, is to be sure that our children are raised with the morals and values that shape them to be contributing members of society. We want them to have good souls and to help others. We want them to be independent – both socially and financially. By starting early with their financial education, we hope to help them avoid the pitfalls to which we fell victim.