The ability for children to say “no” to themselves leads to better self-control when they become adults. In 1968, a study was begun at Stanford that tested children’s ability to defer gratification – or, in other words, to tell themselves “no.” After following the children into adulthood, research revealed that children who were better able to develop strategies for delaying gratification at young ages became more educationally successful and emotionally intelligent later on in life. They knew the difference between needs and wants.
Now, more than ever, it’s important to teach our kids how to handle money responsibly. When should you start? As soon as kids can count, they can be introduced to concepts about money. Help them learn to distinguish between needs and wants. Show them how to set financial goals and stick to them. Our kids are visual learners, so we gave each of them three jars and had them set aside one-third of their money for saving, one-third for spending, and one-third for giving. Yes, even young children should be encouraged to share their resources. Teach your children to handle money wisely. Their future depends on it. Here’s how to teach your kids how to manage their money well.
What to Do
- Be a role model. Demonstrate to your children that you’re willing to put aside personal wants in order to meet the needs of the family and others.
- Exercise discipline. Share with your children your budget plans for saving and spending, to ensure that the family is provided for.
- Live on a budget. Know your budget and use it as a guideline for all purchases.
What to Teach
- The difference between needs and wants. Needs are items or services that you must have in order to live. Wants are items or services that you would like to have but can live without if necessary.
- The value of a dollar. Many chores should be done without compensation to teach children the value of serving the family. When possible, however, offer your children the opportunity to earn money. Compensate fairly without over-paying so that the child will begin to understand the value of the dollars they earn.
- To budget. Even young children can begin to understand the importance of deferred gratification with a simple budget for spending, saving, and giving.
- To question every purchase. Have your children ask themselves: Is this worth it? Will I use this and enjoy it enough for what I am spending on it? It’s even good to do this exercise after the purchase to educate themselves on future purchases.
What to Plan
Download iMOM’s Share, Save, Spend tool. Give your child three jars (clear jars work best because the child can see the money building up inside). Label one jar Share, one jar Save, and one jar Spend. When your child earns or receives money, place a predetermined percentage in the spending jar, savings jar and giving jar. For example, you might decide that 10% will go in Share, 50% in Save, and 40% will go in Spend. Once you determine the percentages, stick with them consistently.
Tell us! How do you teach your children about money?
