Kids and Money Part 2

Spending money

So what is the point of having money if you do not spend it?  That is not to say that we should spend our money like water.  Just as we need to responsible with our money and we need to teach our children to be responsible.  That means teaching them how to spend their money.  Today, I would like to share a few ideas on helping your children learn how to spend their money.

So your child has done their chores, and earned their money.  They are filling up their three jars and having fun learning about money.  Before going on, I would like to discuss the three jars once again.  Giving (to church or whatever cause they believe worthy of their hard work), spending (which I like to look at as their week-to-week spending, candy, small toys whatever) and saving.  For an adult the savings would be broken down into 3 further sub categories: big purchases, retirement and emergency fund.  Children generally don’t have emergencies that are within their financial responsibility, and I am not sure it is necessary to start saving for retirement before they start working.  So that just leaves the saving money for big purchases.  So your child has money in all their jars, and is excited to start spending it.

It is important that children have a goal in mind for their saving.  Perhaps it is simply a number.  They want to have $100, because it would be really cool to have $100.  For others, it could be an expensive something that they want to buy: a game, toy, x-box, iPod, or a camp that they want to attend and pay for themselves.  Having a goal will keep them motivated to keep saving.  Once they have reached their goal, talk about setting a new goal.  They should always have a savings goal.

Now that they have money, they have learned to want stuff.  Most likely their wants exceed their dollars, so it is important that they learn to save their money properly, and get good deals to make it go just a bit further.  Of course there is always the sales and coupons, but aside from that, there are lots of ways to help spend their money wisely.

One great way to teach your how to get more for their money is to teach them to buy used things and not new, when possible and practical.  Other than the thrill of a bargain, buying used often allows us to practice negotiation skills.  As far as negotiations go, always look for a win-win situation.  You should feel like you got a good deal on an item, and the other person should feel happy to do away with their unwanted item, and have received a fair price for it.  Also, and most importantly, be honest in negotiations.  Don’t be afraid to say that all you have is a certain amount of money to spend on the particular item or that whatever you have is all you have.  However, to say that all you have is $20 when the price is $30, but you have $40, is dishonest.  Teaching your kids that kind of dishonesty will carry over into all areas of their lives.

By the way, garage sales, Craig’s List ads and street markets are not the only places that you can negotiate prices.  If you know who to talk to, you can get a discounted price in many retail establishments as well.  I never hesitate to ask if they sell the floor models or have an “open box special” on a particular item.  You never know when you can get a good deal like that.

Many kids as they get older expect to have a car to drive when they turn 16 and get a driver’s license.  To simply give them a car with  no investment from the child is unwise.  When someone invests their time and money into something, they take care of it better.  Case in point: my parents gave my brother a car when he turned 16.  When I turned 16, the car was passed down to me, but in terrible condition.  He rarely did routine maintenance, and I had to beg him to do the 60,000 mile check up (which my parents paid for).  I wanted him to do it because I knew it would be my car eventually.  In his defense, I did not take good care of the car either, and so I was the last person to drive it.  When my brother purchased his first car, he took care of it.  He did all the regular maintenance like clockwork and kept it really clean.  He takes care of his car because he is invested in it.

I say all this to say that it would be wise to make a deal with your children (early enough that they have time to do it), that if they want to drive, they have to pay for at least part of their car.  How ever much that is, is up to you.  It is then their car, that they also have to keep up with routine maintenance and proper care.

When kids save their money for something, and pay for it out of their own pocket, they have a tendency to want to take care of it better than if it was given to them.  That is not to say that once in a while, something can’t just be given to them, it is a parents God given right to bless their children once in a while, however it serves the children better to learn to pay for their own things.  This goes for big items such as cars as well as smaller items such as toys and candy.

Teaching your kids to spend only the money they have sets them up for success, by teaching them to live within their means.   It breaks my heart to see kids treat their parents like an ATM.  It shows that they don’t have respect for their parents, or all the hard work they put into their families.  Often times, when I see this the parents are also scratching their heads wondering where all their money goes, and why it is really hard to make the ends meet.

God wants our finances to be a blessing to us, and not a curse.  But when the outgo exceeds the income, your upkeep will become your downfall.  Teach your children young to live with in their means, and they will do it for their whole lives.  Then their upkeep will never become their downfall.

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