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Q. I have 3 children under 10. What are some good strategies to help them create good money management habits that will last a lifetime?
A. Children are never too young to learn money management skills that can carry with them throughout their lifetime. Remember, even good habits are hard to break!
Start by giving them a weekly allowance and require that they account for where the money was spent. This exercise will allow your children to learn how to allocate their money for things they want or activities they like to do. Accounting for their expenditures gives them pause to think, for instance, whether the items they purchased were ‘wants’ or actual ‘needs’, and whether or not they feel they made good choices. Providing your children with an allowance also goes a long way in teaching them goal-setting and budgeting, especially if their ‘wants’ are things they have to save for. You could take this one step further and encourage your child to split their allowance in three parts and allocate it to spending, saving and gifting.
The amount of allowance you decide on is up to you but should start small and increase as the children’s ages and abilities increase. As their skill levels improve, you may consider moving from weekly allowance to bi-weekly or monthly so they can achieve longer-term planning. You could suggest they keep a chart to record their expenses to help keep track of their money, and plan accordingly. Stop by your local Synergy service centre, we can give you a bank book that your children could use for this purpose.
As your children approach junior high, you may want to expand this exercise to allow them to be responsible for larger ticket items, such as clothing. They will have to decide what is important to them and justify their spending accordingly. For example, should they purchase one pair of designer jeans versus four everyday, less expensive pairs. If the budget you have determined for them is unmanageable in their eyes, they may decide it’s time for a part-time job after school.
The best way children learn is by example. If you have diligently contributed to your children’s RESPs then show them when they are at an age to properly understand money. This would demonstrate your commitment to a goal and show them that a small monthly amount over time truly can build into a large amount of money. Teaching your children money management skills at a young age can help to alleviate the steep learning curve that many young people face when they step out on their own. Preparing them now, is an excellent plan!
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