Wednesday, February 7, 2007

Mom, I Need Money...

According to various financial experts quoted by Bankrate, a few guidelines to promote your child's conciousness about money start with the almighty allowance:

  • Start giving an allowance whenever your child starts getting the I-want's.
    The experts mean this. Even if your child starts wanting things as early as age 3-5.

  • Give enough to cover expenses.
    When a teen starts buying his own clothes, add a clothing allowance. Teach him to budget for things like movies, going out, and clothes, but don't bail him out when he's "stuck" wearing last year's coat because he didn't budget for a new coat.

  • Don't tie an allowance to chores.
    Or else it could lead to a child abandoning household chores once he gets a source of income outside of his allowance. Chores are about contributing to the household, and allowance is about instilling fiscal responsibility - don't mislead a child into confusing the two.

I don't agree with some of these suggestions. For example - not to outrage parents of 3- or 4-year olds, or to discount the aptitude of kids - but isn't that just a bit young to be worried about where to put your pennies? Reading at bedtime I can understand, but reading Rich Dad, Poor Dad? Not so much.

And I'm not sure about the effectiveness a clothing allowance, since I haven't really seen one in action. But anyone who suggests that the shame of wearing an outgrown jacket will teach your kid to budget better next year...well, s/he must not have any teenagers. A child deserves a break once in a while, and I think this situation would definitely warrant an exception.

One important thing that the article briefly skimmed, but didn't highlight is this:

  • Children learn attitudes towards $ from their parents.
    When you exhibit responsible financial decisions, your children will notice & imitate. If you take the extra step to vocalize your financial philosophy and explain your choices with a child, s/he will learn your attitude towards money. I know my mom did this for me, and, hopefully, I will someday be able to teach my kids how to fish too.

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