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Kids Can Budget: Teaching Kids to Manange Money When You Don't Have Any Extra
Kids these days. They don't know the value of a dollar. And why should they? After all, their basic needs are met as if by magic. They watch tv, and see other children's basic needs being met. And then there are 'things'; things appear, and are enjoyed before disappearing. Kids ask for money and are sometimes told yes (with a sigh) and sometimes told no. Sometimes they ask for an item, or look longingly at it, and it goes into the cart. Other days a parent snaps that it isn't in the budget.
No wonder they don't understand how money works. Sometimes we pull out a credit card, and sometimes we use cash. Kids watch, they process what they see and they learn. Sometimes, we might not be happy with what it is they've learned.
In between afternoon cartoons are jingles for payday loans, and credit card ads that portray happy individuals getting just what they want, thanks the the rectangle of plastic in their wallets. Money appears to be a magical entity in itself. Quantity gets confusing.
Games like Monopoly and Life might help, but only so much. After all, board games, again, are conceptual. They're games. As my kids were always quick to point out, they aren't real life. (So, it should be okay to just take more from the banker...that way the game won't have to end...)
It's cute when they're little. But as kids get older, parents start to get nervous. They need to learn the value of a dollar! They need to learn how to budget! They need to learn how to save!
It's a difficult concept when you can freely give them an allowance. It's a much more apt, and difficult, lesson to convey when you don't have the money to give them the 'allowance' other parents use to impart their life lessons.
But, whether you are an allowance believer or not, there are ways to teach kids the foundation of budgeting without breaking the bank-of-mom (or dad).
Should You Give an Allowance?
One of the hottest debates in parenting communities is the allowance, and just how big it should be. Parents who don't have the extra cash to spare might feel guilty, ashamed that they lack the resources for what seems to be such a basic parenting trend. The allowance that starts in elementary school and teaches kids to save up for items that they want. Ironically, those who can't afford an allowance probably aren't buying those items anyways. So, see it or not, it's a moot point.
Personally, I'm not a huge fan of the allowance. I listen to the conversations between my kid's peers that have to do with their allowances. It seems to me that kids have trouble appreciating an allowance when it isn't something they already desire. And how can they learn to manage money, if money isn't something that they want the privilege of managing?
It's an extra step, a blockade between them and the desired Barbie. They don't necessarily see that the doll is going to fall apart in a week. They don't see the amount of work necessary to generate the money necessary to make the purchase. They see only that you are making them wait a month. Or a week. Or until school's out.
What's more, among older kids, an allowance indicates that they deserve cash on a regular basis. They show up at work, they get paid. They shouldn't have to actually do anything unless they want a bonus or a raise. I'm not saying all kids are like that, or that an allowance itself fosters that attitude, but it's a mindset that's common in the late teen and young twenty-something work force.
Teaching kids to budget is much more complex than giving them money and expecting them to learn what it represents and how to budget with it. Money management is founded in making good choices. So you can instill the essential habits by teaching them how to postpone gratification, and how to choose between multiple options.
Just like in real life, there are consequences to our actions. Make sure that the treat box is implemented so that your child can't replenish it early, and make serious penalties for 'stealing' someone else's treats.
Of course, sharing is acceptable. But it doesn't get rewarded by refreshed treats. We give to charity, and no one rewards us. (But, feel free to share your own stash with disappointed kids who were a little too generous.)
And this only works if kids really do have free choices. So, these treats are the freebies. No questions asked. Before dinner, after dinner, whenever any snack would be acceptable, the treat box is free reign. But when it's empty, it's empty for the week. You can discuss good choices and your preferences, but kids need to choose for themselves or they won't learn to curb their own 'spending'.
Sharing: It's Simple Mathematics
The basic concept of a budget can be taught with something like cookies or candy. Give your child a week's worth of special treats in a box in the pantry. When it's gone, they don't get more until Monday morning. They will have to learn to budget their own treats for the week, or go without. (of course, they can't go hungry. Make sure there are plenty of carrots, and apples and raisins around to munch on when they run out of Twix and potato chips.)
The first week or two, your child will probably get a small stomach ache early in the week and be whining for more by Thursday. Don't give in. Don't give up. Budgeting isn't easy. As grown ups, we choose between a better neighborhood or a bigger house. We have to choose between cute shoes or a trendy jacket. We can't afford it all.
Since kids don't have a regular use for their allowance, giving them a treats-budget is an easy way to build that basic foundation of making choices. It also gives them something concrete to work with. If they have a small box with their allotment of treats, they can see the impact of their choices. They don't have to conceptualize what "only 2 more" means. They can see that if they take a piece of candy, there are only 2 left until Monday. And since they can't argue with a box, the wheedling and whining can quickly be dismissed. They made their choices. The only one they can really argue with is themselves.
Earning for Good Behavior
Kids shouldn't get paid for good behavior. Good behavior, and family chores, are a fact of life. But some kids do need a little encouragement now and then.
You can incentivize chores and good behavior with marbles or stickers; which are great currency for kids who don't know what to do with a quarter. You can also try the token method, which works well if you like to visit those family fun zones that include arcades.
The premise of this method is that you WILL be going to the fun zone. What the kids get to do there is their own choice, based on an agreed upon set of behaviors. You need to invest in tokens to start with. Then, each time the child demonstrates the agreed on behavior, they earn a token. Surprise tokens get awarded for especially good behavior. And when the family makes the trip to the fun zone, everyone shares a pizza or fries or whatever is usual for your family, and each kid gets their own stash of tokens to spend wisely. No new tokens are issued. Purchasing tokens with birthday money is forbidden.
This method teaches two budgeting traitas. First, that 'money' isn't free. It's earned through certain behaviors (like work, and savings) It also teaches spending wisely, because if they waste their tokens on games they don't enjoy, they won't be able to spend their time playing Dance, Dance Revolution, or racking up tickets on Skee-Ball.
Money itself is just a piece of paper, or a bit of metal. Kids don't understand what it represents until it represents something tangible. Being paid for chores or receiving an allowance doesn't necessarily add up in the brain of a preadolescent. They don't care about the cash unless they care about the cash, and then they can't necessarily see far enough ahead to conceptualize spending.
But kids do eventually need to learn how to handle money, and how to handle it appropriately. They need to understand what is worth spending a little extra on, and what the rip offs are. They can only do that through experience. You can give them some limited spending experience by giving them an allowance. But an allowance done wrong just fosters a sense of entitlement. It needs to represent a choice.
So choose something desirable, anything desirable, that you would generally splurge on regularly (once a week, once a month) Stop splurging. Instead, hand the cash over to your child and let them make the call. Will they buy gum at the grocery store, or save their cash? The only rule is that once you give them the allowance, you have to allow them to make the choice without judging.
Which means they'll make a choice or two that makes you want to shake them. Don't shake them. It's their cash, their choice, their mistake. They have to live with it. At most, you get veto power. No buying the candy that they've never been able to keep down is a good rule. Nothing explosive, nothing sharp, nothing dangerous. Set the ground rules before giving them free reign with their mad money. You might be surprised at some of their choices.
If they want to drop a month's worth of gum money in the 'Save the Homeless Kittens" donation box, that's their choice. It costs you the same amount of money as you budgeted for gum...and is probably a little better for their teeth.
Their choices won't all be 'good' in your book. But they will make some surprising choices, and you'll learn a little more about the inner workings of your child's mind.