We've all seen it, and if you're a parent, you've certainly experienced a similar scene: Kid melts down, whining in the store that he must have a candy bar, toy or whatever is important in the moment. As the noise escalates, the parent gives in to avoid embarrassment.
That's no way to teach your kids about money. If you want to avoid (or at least curtail) in-store tantrums, you should start teaching them early that money does not grow on trees, and that a want is not a need.
"People start too late," says Dr. Connie Hebert, an educator and literacy consultant and author of "The Teachable Minute: The Secret to Raising Smart & Appreciative Kids."
A toddler on your hip at the post office can watch you give the clerk money for stamps. A 5-year-old can hand the money to the clerk. A 10-year-old can calculate how much you'll need to pay for 20 stamps.
"Kids are never too young to start," says Denise Winston, a former banker and author of "Money Starts Here! Your Practical Guide to Survive and Thrive in Any Economy." "We don't teach kids to brush their teeth when they're 18. ... We have to make sure that we teach them these fundamental life skills."
One problem is that many parents never learned how to handle money themselves, making it harder for them to teach their children. Too many parents let their children manipulate them into spending money they don't have, and that's not good for either side, says Janet Lehman, a social worker and creator, with her husband, James, of "The Total Transformation Program" for problem children.
"Parents do not need to feel like they're bad parents because they can't give their children anything they want," she says. "They need to understand if they're indulgent, [their children] are going to have problems later."
A key way to teach money smarts, as well as the value of time, is with allowances and chores. Experts disagree about whether chores should be tied to allowances, but most agree that kids should be required to help around the house. Doing extra chores (washing windows, cleaning out the garage, raking leaves) can be a way for children who aren't old enough to get a job to earn money while also learning the value of time.
"I think kids have to learn that money doesn't come easily," says Lehman, who has one adult son. "I think it's really helpful to have kids start doing chores at a very early age."
Pamela Yellen, author of "The Bank on Yourself Revolution," advises monthly family financial meetings. Starting when kids are 6 or 7, the family should gather to discuss long-term and short-term spending priorities, both for individuals and the entire family. Once in place, the plans provide a benchmark against which to weigh impulse purchases: If I buy this toy today, does it mean it will take me longer to save up for a bicycle? Or, if the family gets buys new smartphones, does that mean they won't be able to afford a trip to Disneyland next year?
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"If you know what's important to you, you can make conscious spending decisions," Yellen says. "Most people spend emotionally and on autopilot."
When she got a cellphone for her daughter, Winston explained how much it cost and how the bill would be handled. She invoiced her daughter monthly, with a penalty added for late payments -- "$20 extra and I take your phone."
It's important for kids to have a chance to make financial choices and to have an opportunity to make mistakes and then learn from them. "We want them to make a mistake with a $6 allowance, not with a $60,000 salary," Winston says.
Here are 12 ways to teach your kids about money:
Use cash. Kids can see it and understand it, and it gives them a better sense of how much things cost.
Play games that involve money. That could be Monopoly or a variation of store, where kids create a pretend store and sell things for play money.
Show and tell through everyday lessons. Take kids shopping and discuss what things cost and why you're buying what you're buying. Take them into the bank with you and explain what you're doing. "It's getting harder and harder to do that with devices in everybody's hand and everybody's ear," Hebert says. But many teachable moments occur in the car and while you're making your own shopping choices. With younger children, you can make up stories that involve good and bad money choices, as well as share choices you've made in your lives.
Teach kids to divide their money into the categories of spend, save and give. Pay them their allowances in smaller bills and coins, and they can divide it into envelopes or jars. They may need two save categories, one for short-term goals, such as a new iPad, and another for long-term goals, such as college. For their give jar, kids could pick a charity and then set a donation goal.
Model good money behavior. Let them see how you make money choices and that you don't always buy everything you want.
Involve kids in the planning. This could be clipping coupons, reading grocery ads, making the grocery list or searching for good school supply deals. "I think the secret, at least for me, was to give them choices," Hebert says. "They felt they had more control."
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Use devices to discuss money concepts. Instead of you and the kids being immersed in your separate devices while waiting for the dentist, use your cellphone calculator to discuss money concepts or solve word problems.
Give kids a lump sum of money and let them decide how to spend it. That could be setting a school clothes budget and letting your child decide whether to buy one expensive pair of jeans or six cheaper items (and then living with the consequences). Or, you could provide a weekly or monthly allowance that includes money for clothes, school lunches and sports fees and requiring the child to live within that budget.
Share family financial realities. You don't need to share all the family financial details, but it's good to let kids know how much you pay for things, such as mortgage payments, utilities, cellphones and clothes. If the family clothing budget is $10 a month for four people, let them know that
Don't be afraid to confess your own money mistakes. "If you're upfront with kids about your mistakes with money, they learn from your mistakes," Hebert says.
Say no and stick to it -- but explain why. "A lot of people are quick to just say no without going into the explanation," Hebert says. And the explanations help kids learn about making good choices. But, she says, "Sometimes you just have to take a stand and let them scream."
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