When we say “SMART” what comes into our mind as a parent?
There’s a lot of definitions of the word smart. According to the dictionary SMART means having or showing a quick-witted intelligence.
This is the second part of our three-part parenting tip series and we are going to talk about how to introduce money with your kids and how would they earn it.
Most people don’t know much about managing money. And when they were young, they didn’t learn about saving, spending and giving. The number one factor is to teach you kids how to work because that is where results come from. If you don’t work you don’t get paid, if you work you get paid.
Teaching your kids hard work from young age is one way of cultivating them to have a great habit that will stick with them for life and the result is amazing.
Now, if you have a child that is at least 3 years old, you can start them on this method. You can start all the way from this very young age.
What we want to do is eliminate allowances and put them in a commission-based system. This brings a cause and effect relationship between hard-work and money.
When your kids are 3-5 years old, let them earn money for doing household chores. You want to assign them 3 household chores to accomplish weekly. Every time they complete the task you are paying them a certain amount of money.
Some examples are:
- Making their bed
- Sorting socks when doing your laundry
- Gathering up trash and putting it in waste basket
Make this task to be simple but let them have to work for it in order to earn money.
The key to showing young kids that work and money go hand-in-hand is to pay them right after they complete a task. As the kids’ want increases, so will their appetite for doing chores. After that, you can take them out shopping with you and buy something with money they have earned and their minds they connect hard-work and money with buying something they want. That is one way also to cultivate them about responsibility.
Another clever idea that works with kids 3-5 age range, is when you are paying them (a dollar) crumple them up and put them into a jar, pile them up and they would look like a lot of money. A young child will be amazed when they see this pile of money.
How about kids that are a little older?
If you have child that age 6-13 range, you can increase the amount of chores and the amount of money as well. But, we are not going to reward every single chore because this is part of introducing then a responsibility. There are also opportunities to earn a little extra money especially if they are saving for something special.
Here are 5 specific things as a commission- based for you child:
- Make their bed
- Clean the living room
- Take up the garbage
- Load the dishwasher
- Pick up dirty clothes around the house
But, they still have to do some household chores. Like, help setting up the table, help wash the dishes, they have to brush their teeth at night, they have to clean the bathroom once a week. Doing these things, they are not giving a cash reward because they are a member a family. This is something we expect from them as part of our family and as little human beings. This is to introduce them social responsibility through giving.
Now, you can reward your child once a week. They will be delighted to spend their money on whatever they can and whatever specific thing they want.
But this is not just about spending. Much more sensible and thoughtful when it comes to putting their hands in their own pockets, piggy banks or they can give it away. Or you can teach your child a so called “envelope method”. Children that ages 6-13 can understand giving and you can talk to them about their choices.
Aside from paying your child weekly, you can also have your 6 or 13 years old child do some extra job. Like doing yard for your neighbor or baby sitting.
There are plenty of ways to earn extra money and if they really motivated, maybe they are totally motivated to save. So, encourage this behavior.
The bottom line is-
We really want to install good money management skills into our children, and I believe allowing them to earn - and spend - their own pocket money is a great place to start. At young age they will be better organized and understand importantly the value of work.
If you want to know and learn more about this you can check out https://www.daveramsey.com/ and PLEASE also check out “SMART MONEY, SMART KIDS” book by Dave Ramsey and Rachel Cruze. I highly recommend it. This is a fantastic book and you will learn a lot from this as a parent.
Hope you enjoyed this lesson. I will see you back here next week for our final segment on money.
I will teach you the method I use to explain to my students how we can spend, save and give.
I hope to see you then. Have a great week.