The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
How do your kids spend money?
A child wants and a child shall receive. How much money is your child spending? Depending on where you live, you could spend as much as $250,000 raising your child from infancy until adulthood, not including the costs of college. This is an inevitable fact of life and as the cost of living continues to rise, so will raising your children. As a parent, you can offset some costs by depending on your family and friends to provide during birthdays and holidays, but otherwise, the costs of satisfying your child’s needs and wants are solely yours. Is there any possible way to offset the costs? Possibly.
By teaching your child the importance of money and how to budget money, you will be able to teach them the value of money and how much they spend with their own money. By giving your child an allowance for doing specific tasks, your child can learn the value of earning money. If your child wants something expensive, you can even offer to pay for half of what they want and split the costs with them. While many parents may think this is harsh and are likely to not stick with it, you will teach your child an early lesson on the way the world works, helping them early on to understand responsibility and the knowledge of living in a materialistic world.
Educating your Child on Money
You should first give them a piggy bank or a place to store their money. Afterwards, you should set up a daily or weekly budget with how much they will earn for doing specific tasks. You could either do a weekly budget or base it on amount of tasks performed, with each task being one or two dollars. You can teach them that once they spend their money, they have no more money to spend, and they must earn more in order to spend more. You should teach your child the importance of budgeting in terms of having a savings and having a budget towards needs and wants. It is also wise to teach your child about giving to charity.
It is never too late to teach your child about the value of money. By not teaching them, you are not helping them to understand the world. Do not trust the school your child attends to educate your child on the value of money. It is solely your responsibility. While you may think it is harsh to make your child aware of the realities of money early on, even if they highly dislike your methods, they will likely respect you more for it when they reach maturity to understand why you did what you did. If you do teach your child the responsibility and value of money, they will grow to be more successful at an earlier age and be more likely to take care of you in your old age.
How are you raising your child to understand the values of money?
Here is a fun tool to teach your kids about money management called Money Bunny.
Here is an infographic from Money Management International of the ways in which children spend their money.
Click to open / Right-click for save options
Ways Kids Use Money
by Age Range
<10 – 10-14 – 15-18
The major influencer for children younger than 10 is their piggy bank.
Three times as many children under 10 have bank accounts than their parents did when they were that age.
Kids under 10
- Kids under 10 spend 54 percent of their money on wants – that is more than any other age group.
- Kids under 10 also devote more of their money to savings than any other age range: 28 percent.
- The major influencer for children younger than 10 is their piggy bank.
- Three times as many children under 10 have bank accounts than their parents did when they were that age.
- Young children are at an opportune age to begin good saving habits. Give children piggy banks to encourage saving when they are very young. Once they are a little older, graduate them to their own bank savings account.
Kids age 10-14
- Children in this age range spend a greater percentage of their money (20 percent) on things they need.
- Kids today are five times more likely to learn about money as children than their parents did as children.
- The major financial influencers for 10-14-year-olds are schools and structured learning.
- Parents should take advantage of the financial lessons schools offer to kids, such as fundraising opportunities, and expand on those lessons at home.
Kids age 15-18
- Teens spend more of their money than any other age group on needs – 27 percent. This shift probably reflects teens increased responsibility over their lives, including responsibility over their finances.
- The major influencers for 15-18-year-olds are their parents.
- Parents can help prepare 15-18-year-olds to be good money managers by involving them in the family finances. Encouraging teens to get a job and earn their own money will also help them learn financial responsibility.
Matthew Gates is a freelance web designer and currently runs Confessions of the Professions.