Teach Your Children Financial Responsibility
- Tuesday, October 05, 2010
Kids seem to catch on earlier and earlier. And at this age, your children are inundated with appealing advertising and their friends sometimes have nice things that they don't have. And they may have learned by experience that Mom and Dad occasionally give in if they keep asking—their desire for toys, games, clothes and "stuff" seems to grow rapidly.
So, this is why you have regular allowance increases in your plan. One way to fend off arguments about the latest thing your child wants is to simply say, "That does look cool. And in five or six weeks, if you save your allowance, you'll have enough to get it!" Also, if your child is upset about not getting what she wants, that isn't the best time to talk about the economic concepts of opportunity cost or scarcity. Save that conversation for another time and simply let the reality of the situation do the teaching.
As you increase your children's allowance, I would suggest that you also increase the number of expenses that they will need to pay for themselves. For example, if you go to a movie as a family, maybe you can pay for the tickets, but if they want a ten-dollar bucket of popcorn, that's up to them. Or if you go to a theme park with your children, you'll pay the admission and the basics like lunch and drinks, but they should expect to pay for souvenirs or extra snacks throughout the day. (And if the trip to the theme park is planned several weeks in advance, it's good to give your children some notice about how this will work.)
In the 8-12 age range, I don't suggest starting with huge responsibilities. Just to let you know, in the age ranges of 12-15 and 15-18 I recommend moving more and more of your children's budget items to their plate, so they get more money and more responsibility to make purchasing decisions about their clothing, daily care products, and other "normal" expenses. By the time they leave your home, you want them to have plenty of practice making decisions about almost all their financial needs.
With an 8- or 10-year-old, you're just starting down that road, but it's good to keep the end goal in mind and make small changes to move in that direction. As they grow older and their allowance increases, so does their responsibility for expenditures—and their accountability.
Here's an example: Isaac takes his children to the grocery store to purchase the family food for the week. As they traverse the aisles, he asks his daughter Alexa if she would like the name brand or the store brand cereal. Before she can answer, Isaac reminds her that he is willing to buy the store brand, and if she wants the national brand she has to pay the difference. After a short pause, Alexa chooses the store brand.Alexa's mom, Anna, takes her to shop for school clothes. An outfit at the popular name brand store costs about $35, and a similar one at a discount store (without the popular name on the tag) is about half the cost. After some time looking, Alexa says, "Mommy, these clothes are too expensive! Can we go to the thrift shop?" (No, she is not up for adoption.) This may not sound realistic, but it really does happen when children are trained to think about (once again) opportunity cost, scarcity, and the other principles I discuss in my book, Dad Cents.
As your children start taking more responsibility and growing in their decision-making abilities with money, the requests and begging for things should decrease. Your children will learn that, by saving their money, they have the means to make purchases and don't have to constantly ask you for things. They will probably learn pretty quickly that asking you to buy them things doesn't work! In the process, your children will also begin to make better choices with the money they do have. They'll really start thinking about how much they want something and which things they can live without.
Excerpted from Dad Cents by Shane Barkley (Timothy Publishing). Copyright (c) Shane Barkley. All rights reserved.
Shane has a passion for teaching dads how to intigrate Biblical financial values into their children's lives. Shane has a degree in Business Administration from John Brown University and has 10 years experience in the financial consulting industry. He currently serves as the President of Dad the Family Shepherd. Shane and wife, Valerie, live in Topeka, Kansas with their three daughters.
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