Parenting columnist Ian Munro continues his series on teaching children about money.
You are going to make a start in teaching money-handling skills and the value of money.
A good way to get this under way is by setting up an allowance or pocket money for your youngster’s contribution to Team Family.
Generally speaking, a 4-year-old should be up to this. By then, I’ve found, they usually have a reasonable sense of what money is about. However, if you always use plastic yourself rather than the hard stuff, and I know many households rarely have a dollar note let alone a coin in the place, it may take longer for them to get the hang of it.
If this is the way you manage your money, I suggest that you ensure you have coins and notes on hand for smaller purchases when the youngsters are around. Plastic and online banking are great, but you can’t beat actually handling the stuff to help children in their understanding.
How much should an allowance be? There are various ways of determining this. Some parents settle for a weekly amount starting at 50 cents or a dollar, others for an amount half the child’s age, or matching the child’s age, and raised each birthday. A formula such as this makes it easier to explain when younger siblings can’t understand why they receive less.
I’d suggest that you also have an upper limit in mind and that the allowance remain at that level from age 12 onwards. From then on, it’s over to them to supplement their allowance with part-time work. From about age 14 some parents will additionally provide their teenagers with the amount normally spent on their clothing for the year and give them this responsibility, with no bail-outs.
As a child gets older, the allowance can also be supplemented by their contracting to do certain special tasks that you might consider above and beyond what you’d expect as a standard contribution to Team Family. This might include carting and stacking a load of firewood, helping paint the house, spring cleaning the kitchen for an hourly rate or negotiated fee, or even running the vegetable garden and selling mum the produce: at a discount to the supermarket price, of course! Now that certainly teaches the value of money and the concepts of marketing, profit and loss and supply and demand.
That’s the amount settled; now what about savings and budgeting and perhaps giving to others? The easiest way of introducing these concepts is to build them into the allowance from day one and there’s nothing like a good old-fashioned piggy bank or even a couple — one for spending money and one for savings.
I’ll pick up from here next time.
