Never has there been a better time to talk about money with our children than in January. Everybody is all about change in January. As parents we can stay motivated to stick with our own money resolutions by remembering that anything we do — our children will eventually do.
Start the New Year by giving your kids some money responsibility:
1) Start Allowance: The best way to help your child manage money wisely is to give them some money to manage. Allowance helps a child experience budgeting. Tie allowance to expenses they need to cover. (See previous blog entries from January and February 2008 for more on how to start the allowance process and execute the allowance contract.)
2) Update allowance: Now is the time to take a look at how allowance is holding up. Is it enough? Is allowance being used to cover the expenses you agreed to when you executed your allowance contract?
3) Get a job: Encourage kids of all ages to work. For the younger kids, work at home. As they earn money from their job, talk about the four choices they have for money (save, spend, donate and invest) and make sure they use all four. This will pay huge dividends later when they are on their own.
4) For older kids, work outside of the house: This is one of the best lessons kids can get in life. They not only earn money but they also learn about taxes on the money they earn. They begin to understand what it takes in time and energy to make money. Money they earn they will spend with care and save with new interest.