In the past, my husband and I have made many not-so-smart decisions when it comes to money. Now that we have taken the steps to be on track with our finances we want to help our kids avoid some of those same money mistakes. Here are a few ways that we are teaching them this important life skill.
Budget: Every month we prepare a budget. My husband and I will go through every detail together to determine the right budget for us. Not only do the kids see us meeting but we also ask their input on items that affect them. For example, if we want to plan a family adventure we may decide together how much we will spend and what we might have to give up that month to not go over budget.
Spend, Save & Give Accounts: The kids each have three accounts that they determine how much money they want to put into each one. These are dollars they receive as a gift or for doing extra chores at home.
Spend...this is their play money. They can use it to buy new toys, electronic gadgets or whatever their heart desires. Our son had a goal to buy a go-kart. He was ecstatic the day he had enough to pay for his half of the go-kart. My husband and I thought this new ride sounded too fun so we agreed to pay for half of it so we could sneak in a few rides too! It took a lot of discipline for him to not spend that money every time we walked the isles of Target. A few times he almost gave in but then remembered how much he wanted that go-kart and he would put the toy back on the shelf. As adults we even struggle with that!
FYI...The items he put back on the shelf ended up being great ideas for birthday and Christmas presents.
Save...with this account the kids are saving up for their first car and extra cash towards college. The kids tend to put the most in this fund unless they are saving up for something fun like a go-kart. They are also earning interest on this money so they are excited to know it's growing. We have a few more years before our kids will be driving (thank goodness!!!) and going off to college but they know cars and college are expensive.
Give...they love this account! This money is for them to donate to something or someone else that needs the money. It warms my heart seeing my kids freely handing over money to their church or for a school fundraiser. In the past we would often give them the money to donate. I now believe they have more of a connection with that kind and generous act if they are using their own money and determining who receives it and how much to give.
Just like riding their bikes, kids are going to take risks and occasionally trip up with their money as they get older. Our goal is to help guide them so they know how to get back up on that bike and keep cruising along the journey of life.