3 Money Topics We Should Talk About With Our Children

Money is a big part of life.  As much as some of us may try to say it isn't, that money doesn't rule our lives, it does.  You either are trying to figure out how to get more or trying to figure out what to do with what you have, or most likely, both!

From a young age, when children start to get an allowance, birthday money or even just finding change on the street, they want to spend it.  They don't care how much they have, or even if they have enough, the second that glorious money hits their possession, they want to use it.  I'm not sure if its because it makes them feel older, being able to buy something by themselves, or just the adrenaline that they receive from getting a new item, but they want to spend it as quick as possible.  This is why it is so important to teach them at a young age the importance of saving money.

50/30/20 rule - If you don't know what this is, look it up.  Basically it means that you use 50% of your money for essentials (rent/mortgage, food, gas, and utility bills), 20% goes into your savings, and 30% is for personal things (cell phone, new clothes, new gadgets, etc).

Obviously, your child does not need to pay for essentials, so you need to sit down with your child, and come up with their own plan.  Maybe, together, your child decides that they want to keep 50% for spending, 30% for their savings, and 20% to give to charity.  You're the parent, you know how to guide them in the right direction, but try to focus on saving first, and spending second.
I personally need to let my children make more decisions about this.  Right now, they save their money and give some to charity.  I don't let them spend their money on much, because I know most of it is crap that they want, and they have so many toys at home.  That being said.  Most of the time it's not that I just say no.  I'm usually talking them out of it.  More often than not I say:

"Do you really want to spend your money on that?  You'll probably use it a few days, and then get bored with it.  Wouldn't you rather save your spending money to get something big?" 

 This usually works, but they haven't gotten that "something big" item yet.

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Short term and long term savings - Teach them the difference between these two.  It can be really hard for young children to understand long term savings.  My daughter, who is 9, is only now really starting to understand.  I asked her one day:

 "Are you going to want your own car when you can drive, or do you want to have to wait till Mommy and Daddy let you use ours?"

Of course she said she wants her own car so she can go places when she wants.  And then, to get some brownie points, she said so she can help drive her siblings around also.  So I told her that we may not be able to afford a car for her when she's that age, and if she had a good savings, she could get a nicer car.

Now while that's a long way away, there are aways bigger ticket items that she wants that we just won't pay for.  These are what she saves for that doesn't take her too long.  You want a new game for your game console?  Save for it.  You want a new toy for outside?  Save for it.  You want that adorable Justice shirt (which is way to expensive for my blood).  Save for it!

We all spend a lot of money on our kids, putting them in activities in order to enrich their development.   They know this.  When they complain that we never get them anything (ohhhhh just wait till they find out about Santa!), we'll come back with, "Okay, well to get that then we can't send you to that basketball camp you have your heart set on".  They go silent real quick.

So that being said, when she sees something she wants, she says she's going to save her money for it!

Let them start a small business - My oldest sees me with my business and her brain starts to turn.  She sees the fact that I can make something out of just yarn, and people pay me for it!  Something I love to do, and I get money from it.  So she starts to think.  She LOVES doing perler beads.  Usually, she just gives them out to her friends, because what is she going to do with a box full of all her creative productions?  One day, though, she really started thinking about it.  She asked if she could sell them at one of my craft fairs.  I told her I thought it was a great idea, but she had to start thinking like a business woman.  I asked her questions such as

Do you think people would want them just plain? 

What about adding keychains or magnets to them, so they become useful?

How much would you sell them for?

How many of each kind do you think you need?

You realize you need to use some of your money to buy the materials to make them right?

Then we got talking about the phrase 'you have to have money to make money', and I think I lost her.  LOL.  She is gun-ho about it though!  She has a shoe box to fill up, and she asks me to find examples of 8bit images of certain animals or characters on her iPod so she can make them.

Having your children start a small business is great for them.  Help them come up with the idea, then plan it out, and then help them execute it.  I say help, but if they are older, they can obviously do a lot of that by themselves.

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Sum up - I know money issues can be hard with young kids.  Knowing when they are old enough to understand is up to you.  You know your child best, and you know whether or not it's an appropriate time to start talking about it.  Like I said earlier, even I have a hard time with it.  I don't let my kids spend their "spending" money like I should.  They really need to take that responsibility, and maybe they will by that crap item.  But you know what?  They'll learn.  They'll figure out that they don't want to waste their money on something that won't last very long, or that they may end up losing interest in!

What do you let your kids spend their money on?  Are they required to save anything? Or do you let them get what they want, and learn that lesson on their own?  I'd love to hear in the comments below.