How to Establish a Healthy Relationship with Money

As adults, we talk a lot about money. We spend much of our days managing it (spending it, earning it, giving it away). We also dream about it, and yes, we fight about it. But do we talk to our kids enough about money? How it is that all these kids are entering the real world, only to find themselves in debt and unprepared to make their own decisions about how they will manage their money when we talk about it so much?

I love the phrase, “Don’t listen to the mouth, watch the feet.” When it comes to money, don’t waste your time talking or lecturing your kids about it; let them learn about money themselves by giving them some of their own. This is an opportunity for your kids to develop their own relationship with money, outside of anyone’s influence, and for us, as their parents, to support the growing independence of our children.

There are three long-lasting effects of giving your children money:

    1. They learn how to spend money
    2. They learn how to save money
    3. They learn how to give away money

As you consider growing your grown-up, wouldn’t it feel tremendous to know that your child spent years figuring out how/when/why to SPEND their money? And how/when/why to SAVE their money? And yes, how/when/why to GIVE some of it away? Do you think they would lean heavily on their experience of managing their own money when it comes to decisions around what jobs to take, what apartments to lease, what colleges to attend, how many loans to take, and what it feels like to be in debt when another high credit card company sends yet another shiny credit card offer?

Suggestions for getting started with giving your children allowance:

  • At the youngest age possible, give them an allowance, and let them spend it any way they want. No discussion needed!

    Bonus for YOU: Guess what? You no longer have to buy them anything beyond their basic needs. So when you go into a store and they beg for that great little something they have always wanted, you get to say, “YES! Did you bring your money?”

  • When they are old enough to be interested in a bank account, open one for them. Give them practice depositing and withdrawing money. Let them have a debit card, so they learn that the money coming out of an ATM isn’t free.

  • Have them help you pay bills and balance the household account, so that they can get a sense of how much “life” really costs.

  • Talk to your kids about giving money away. Tell them what charities you give to, how much you give, and why. Maybe you might ask them to weigh in on charities they are passionate about.

A common story I hear in my parenting classes after the kids have been getting money regularly is the effect these little money spending rascals have on their friends. Imagine your three-year old child going into a store. The young friend, upon seeing some shiny “gotta have” object, begins to whine and beg their mother for it, at which point your child looks at the friend and says, “but you didn’t bring any money?” GAME CHANGER.

Giving Kids an Allowance: Tips for Success

    1. Suggested amount: $1 per year, each week. The 5-year old gets $5; 10-year old, $10; etc. Remember, they now are responsible for purchasing treats, toys, and gifts for others.

    2. When they ask you for something simply reply, “Yes, did you bring your money?”

    3. Discuss purchases and ask questions. “Do you think it’s worth this amount?” Get them thinking! And…

    4. Stay calm and collected if your child wants to buy an outrageous item! Zip the lip. You’ll survive like I did when my child purchased her first (and only) bag of oversized marshmallows with her first $2. (And guess what? She only ate 3 of those disgusting little corn syrup pellets and then felt sick and forgot about the bag forever.)

    5. Please practice encouragement vs. lecturing or steering. For example, the lecture sounds like, “You don’t have enough money. Remember you bought that toy and spent it all on the last trip?” Instead – try encouragement: “Hey, in just a few weeks you’ll have enough if you decide you still want it.”

    6. Encourage selling their old toys or working “jobs” if they want to put more money in their wallet. Once they realize how much an extra $10 will help them, they get creative.

    7. Hold family meetings at the same time each week to divvy out the cash.

    8. In order to stay on schedule, get 100 $1 bills, keep them in a family meeting box for “more convenient” handing out.

    9. Let the kids choose where to keep their money “safe” – some might discover that trash bag was a bad idea- it’s ok.

    10. Don’t worry about it once it’s in their hands. Trust the learning!

    11. Money will be a part of our children’s lives every day; we have an opportunity, as parents, to introduce them to money and help them create a healthy relationship with it so when they are on their own, they will have the confidence and the experience to manage their money well, to put it to good use, and to avoid the difficulties that so many families face today in this country.

Need more reasons your kids would benefit from allowance? Here’s 11 reasons every kid should rock a wallet.

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1 thought on “How to Establish a Healthy Relationship with Money

  1. I have a question. We used to give allowance, but it’s been about 6 months since we actually “paid up”. We want to start again. So now my questions begin.

    Do I pay the “back allowance”? At what rate? We used to do 50 cents per year of age while you recommend double that. Do I pay the back allowance at the old rate then begin from this time forward with the new rate? Is it harmful to give them such a large amount of money all at once? I’m worried enough about how they’ll handle their money, never mind giving them half the year’s worth at one shot. What do you suggest?

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