Start teaching your children about money early. Starting around age 10, give them a few dollars every week for them to spend however they want. Make the allowance dependent on the doing household chores, but let them choose what they want to do instead of assigning work. Don’t set limits on what they can spend it on, but don’t continually buy them things they want. They’ll soon learn that if they spend all their money as soon as they get it, they won’t be able to afford more expensive things they want.
You should also start early introducing your children to budgets and how much things cost. Have them go to the store with you, help you with the household budget, or watch you pay the bills. Soon they’ll realize how much some things really cost.
As your child gets older, about 13 or 14, increase their allowance as you increase their responsibility. For instance; add their lunch money to their weekly allowance and make paying for lunch their responsibility. Once they’re more responsible, give them a budget for something bigger like clothes and make them stick to it. They will soon learn that if they want expensive things, they have to sacrifice elsewhere. If you find that your child is not using money for its intended purpose, take back control of that money until you feel they can handle it.
Eventually, your child will probably get a job. Take this opportunity to teach them about savings. Have them put a percentage into a savings account to use for college or other pursuits. Also make them save a smaller percentage for a future purpose (i.e. a computer, a video game system, etc). Let them use the rest as mad money to spend however they want. If you’re worried about what they’re buying, open them a checking account you can monitor.
Teaching your child the value of money will not happen overnight. It takes many small steps. Remember that they will probably mess up along the way, but mistakes are how they learn.
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