Teaching Kids Not To Spend All Their Money

Kids Should Not Spend All Allowances At Once

First Published Date: April 25, 2012 ADawnJournal.com

Teaching kids about money should start at an early age. The money management skills you teach them today will go along a long way and can make the difference between a well-managed financially successful adult or someone who is living paycheque to paycheque.

Giving kids an allowance should start at an early age. However, the art is to teach them how not to spend it all and save some for the future. The basics of budgeting should be considered while talking to kids about not spending all their money. Instead of leaving them without any guidance after giving allowances, it is recommended that you break down their allowances into pieces in terms of how it should be used. For example, 10% should go to charity, 10% should go to buy a science magazine, 10% should go to the piggy bank, and so on.

Some of the biggest challenges parents will face managing allowances or saved money from past allowances are misbehaviour and identifying the distinctions between wants vs. needs. Misbehaviour can be managed by applying a few rules for violating a good behaviour. Try to explain first that this is (a misbehaviour) something not acceptable and there will be consequences if it happens again next time. If kids do the same misbehavior again, stopping allowances for a few weeks or a deduction can be tried. However, be careful not to implement something too harsh. The differences between wants vs. needs can be addressed by talking to them. If they are asking for something unnecessarily, have a conversation if they are willing to give up (spend) their allowances to buy this, and this is something they need it enough to buy right away.

Parents play the most important role to instill right money habits on kids from the beginning. Whatever you are teaching them now will become a lifetime habit. Habit from childhood is something very hard to break. So it is important to give kids some positive money habits that will lead them to the highway of financial success.