Many of us can remember the first time we used our money - our very own money - to purchase something we’ve been pining for. Maybe it was a CD player or a pair of roller skates or a see-through phone. We saved up our allowance and all those $2 coins that Aunt Tess would slip into her birthday cards and exchanged it for something we cherished. And it was great. “What a joy it is to be part of the spending population!” we thought.
For kids, this continues to be a necessary rite of passage, a way for them to feel the pride that can come with ownership. But why stop the lesson there? As parents, if we really want to teach our children the value of money, we should have them use some of their pocket money for needs, not just wants. April Lewis-Parks, a mum and the director of education for Consolidated Credit, shares this advice with NBC News:
When deciding how much allowance to give, you’ll want to be sure that everyone understands what the allowance must cover. Is it school lunches? Snacks? Computer games? Extracurricular activities? For older children, you may want to add clothing or other bigger ticket items to the list. Always write it down initially so there are no misunderstandings later.
This, of course, is less exciting than simply drawing a giant money meter with picture of an Airzooka blaster at the top. But it’s important. When kids must pay for a few necessities, they’re forced to make some hard decisions.
Say if a tween really wants that LEGO Harry Potter set, but they must also, well, eat lunch, they might decide to make their own sandwiches instead of buying school cafeteria lunches for a few weeks. (In your agreement, you might add in a disclaimer that they can’t just go without eating.)
It’s a way for you to talk to them about budgeting, and in the process, let them learn some tough lessons. Sure, it’s a bummer that they must miss out on the basketball team outing because they’ve spent all their money on video games, but perhaps they’ll use that experience to make different choices next time.
Choosing 'needs' for your kid is a little tricky. You probably don’t want to include items that could lead to hefty consequences if they don’t have them - a school study guide or clean underwear, for instance. But you might include the day’s Wi-Fi passcode or birthday gifts for their friends.
You should discuss needs versus wants and how to determine what falls into each category. Your definition of a need is probably a whole lot different than what they’ll hear in ads and from friends.
The point is to show them them that spending isn’t always 'fun', but there are ways to get creative so they’ll eventually have some money for the things they truly want.