Money Facts - Teaching Your Children About Wise Spending!

What better gift to give your children, than the gift of knowledge? Sharon Epperson, author of The Big Payoff writes a MoneySmart column in the USA WEEKEND. She notes that financial education plays a major role in our children's development and their future success, yet as parents we aren't being proactive in our approach to teach them.

Why are so many children graduating from high school today lacking financial knowledge? They possess no finance skills and have not been given the tools to sustain in these uncertain economic times. We haven't taught them to balance a check book, much less how to budget their funds properly. They really don't understand how credit works, they only know that with a credit card in their hands, they can buy what they want!

Wants and needs most certainly differ. What kind of examples have we set for our children? Did we set realistic boundaries when giving in to their wants and teach them the value of a dollar, or did we over extend ourselves and our own credit cards to create a fairy tale story ending?

It is important that children learn the value of a dollar and an understanding about the difference between their wants and needs. Without this education, our children enter into the world feeling entitled to have everything they want, without a clue about the consequences.

You hear parents say "My children think money grows on trees"! Is the perception they have to be faulted, or have we created for them a false vision of a free flowing river of money? By shielding our children from the harsh reality that we just don't have the money, we allow them to believe that there are no struggles and everything they want is available for the asking.

I know from personal experience when I would have to let my own children know that I couldn't afford to buy something because I didn't have the money, they would say "Just go the bank Mommy and get some". Oh how I wish it had all been that easy.

So what can you do to help your children and encourage them to be money wise?

It starts with each one of us, as parents. We must first be honest with our children as it relates to our own financial situations; they need to understand that we struggle too. Why not share our own personal experiences with credit card use and over extending ourselves, as an opportunity to teach our children? If our own experiences help others, then the lesson is not lost.

Don't be so quick to give your children everything, allow them to earn money by working. Of course you can't send them out to work, but establishing a weekly allowance for certain chores. If the chores are completed, then they are paid. If they neglect their chores, there is no spending money. And encourage them to start saving money. You can even work out an arrangement for them to save half of their allowance and open a savings account at your local bank and agree to match their weekly contributions. This method works best if you start them off young, when allowance can be a dollar!

This system isn't intended to make you go broke, but rather to create healthy habits! Remember, they didn't always choose to brush their teeth and comb their hair either, it took a little training.

Once they are earning and saving money, encourage and allow them to spend the cash they have to buy something they want or need. Have them walk into a store with their dollar fifty and tell them they can go buy whatever they want, as long as they have enough money. They will soon learn that it takes a little more than a few dollars to acquire those things that they want. In addition, by suggesting that they use their money to buy certain things, it changes their perspective on what they want. They begin to establish their own boundaries on what they are willing to spend their money on.

It's best to start these practices early, but it is never too late to begin.