This post was underwritten by BMO Harris Bank, which offers a matching $25 on a new savings account opened for your child through their Helpful Steps for Parents program. Learn more at bmoharris.com/parents.
As a parent I worry about giving my kids life lessons in money management. I want them to know the importance of saving and also the value of what they have earned. Sam is just three years old, but already we talk about how Mommy and Daddy work and earn money so that we can buy things for our family. "Like trains?" he asks. "Yep, even your trains!" He must also be picking up on our conversations such as me saying "That's too expensive!", or "I have a coupon for that!" The other day he was looking at a toy magazine and told his sister "You don't need that toy, Bella. It's too expensive!" At age three, I think he's getting down the basics of money and it's power to buy his trains!
Bella is seven years old and has a better handle on money and how it works. While my husband was out of work, we sat down and explained to her that we were bringing home less money and were going to have to cut back on some things. She volunteered to quit going to her gymnastic class for a while and started brainstorming on ideas for herself to make money for our family. This literally brought tears to my eyes. Instead of stomping up to her room angry about giving up her gymnastics class, she was offering us help.
At a young age, about 4 years old, I started giving Bella a small allowance for completing chores around the house. I made up a chore chart that we still use today. She does simple things that teach her independence and how to run a household, like wiping off the table, picking up toys, helping with the dishes, making her bed, etc. Kids really like to help out! Start small with their chores and then teach them how to do more and more! After the completion of each chore, I would give her a sticker or check mark and at the end of the week, we would add up her stickers and she would be paid for each one. We paid her 5-10 cents for each one and this would usually add up to $2 - $3 dollars per week.
After receiving her allowance she was thrilled to have her own money! So then it began... "Can we go shopping Mommy?" Now I had to teach her how to manage her money. Although it was only $2 -$3 per week, I didn't want her to spend it all at once. I want her to realize the joy in saving up for something big that she really wants as well as saving for the future. When we did go to the store and she wanted something, we would talk about how much money it would cost and how many weeks it would take her to earn the money for the item. She was starting to understand that you need to be selective about what you spend your money on, because when it's gone, you can't buy anything else until your next pay day! We also opened her a savings account. I explained the importance of saving up her money. I used the example of my husband losing his job. "When Daddy was out of work we had to rely on our savings to buy the things we needed while Daddy was no longer bringing home a pay check." If she puts money in her saving account, it will grow and someday she will have enough money to help her out while she is in college, etc. I'm not sure if she really grasps this yet, but she loves putting money into her own account and seeing the balance increase every time she makes a deposit!
In conclusion, I think these things are important when teaching kids about money and savings:
- Start early! They are never too young to start learning about money!
- When they are able, start getting them involved with household chores.
- Reward them with an allowance - pay them per chore or whatever works for your family. Just make sure they understand that they are being paid for the work they do.
- Try to have them set goals for their money: Save, Donate, Spend.
- Have them start a savings account at a bank, so that they start to understand how a bank works and can watch their money grow!
I was selected for this sponsorship by the Clever Girls Collective. To learn more about BMO Harris Bank, visit their website http://bmoharris.com/parents.