Teach ‘em young … money isn’t a plaything

Learning to handle money isn’t something kids can pick up in one lesson or even in a few weeks. But if you have a plan, appropriate for each age, it can be easier than you think, especially if you give them an allowance.

An allowance is not pay for jobs done around the house. Each child should do chores around the house simply because it’s what family members do. An allowance is given to a young child as discretionary funds. Older children can receive an allowance that covers a few basic needs and discretionary purchases. By combining an allowance and your hands-on guidance, you can teach financial goal-setting, planning, and decision-making.

Even the very youngest ones taken to the grocery store can begin to understand the differences between wants and needs. Let them cut coupons to help with the food budget, and show them how much you’ve saved. Older children can be involved in the decision about major purchases or family vacations.

Children need to learn to make choices with money, and to live with the results. Spend time talking about any potential purchases and other choices, but let them make mistakes. Don’t bail out a child who’s made an error in judgment.

At the same time, children need to learn the value of regular saving. Putting away 10 percent is a good habit to start. When they’re old enough, by the age of eight or nine, a passbook savings account will let them see how money grows.

• With young ones, when it’s time to buy a toy with saved money, teach the child to write down the expenditure and to keep the receipt. This sets up a lifelong habit of being aware of where the money goes.

• Older children should be supported in their attempts to generate cash through mowing lawns, washing cars, babysitting and the like. The more entrepreneurial the task, the better, as children learn to depend on themselves rather than a paycheck.

In summary: A child who doesn’t learn money skills at an early age likely goes on to adulthood with the same lack of skills. Start them young, and by the time they’re on their own, responsible habits will already be in place.