"I want it nooowww."
The whine is intimately familiar to anyone who has ever seen "Willy Wonka & the Chocolate Factory"--or anyone with a child of her own. Spoiled Veruca Salt's obnoxious demands for everything in sight stem from ignorance of the value of money and a parent who never says no.
How to value money: It's one of the most critical lessons parents must teach their children, and it's all too easy to fail. Consider a few ideas if you're struggling with your own young ones.
Let kids see you use cash
Young people need to learn what fuels the plastic that buys your food, clothes and toys. These days, you may go a month without pulling cash out of your wallet, and credit cards may seem like an endless bounty of possibilities to young eyes.
Put cash in your wallet for key purchases, such as the weekly grocery run. Help your kids understand what is behind the plastic and that once the wallet is empty the spending is over.
Start a savings habit early
Teach your children how to handle their own cash and the benefits of saving. A piggy bank is a favorite baby gift for a reason. Adding coins to a small bank can be very satisfying for little hands. When the kids are old enough, explore child-friendly savings accounts at a bank. Many offer small initial deposits, and your child can learn to maintain a passbook or use a website to monitor an online savings account.
Even in times of low interest rates, your son or daughter will be impressed by the power of compound interest.
Give them choices in budgeting
Kids need to learn that financial responsibility is the result of constant choices. Depending on their age, let them participate in budget planning a little, or a lot. If they are old enough, consider letting them be part of the family efforts when you and your spouse work on the budgeting.
If there is something your child wants, show him whether it's affordable in the context of your other obligations and goals. Let him decide, "Do I want a small toy now, or something bigger next month?" A $100 pair of jeans may seem less desirable when an adolescent realizes it's his entire clothing budget--or he'll find a way to pay for it himself. These lessons will be especially critical in curbing teen consumerism.
Use an allowance wisely
Whether or not you tie an allowance to chores, expect your child to pay for certain things he wants--a special toy, a video game or, for older kids, all or part of a first car. Your child will learn that frittering away money on small purchases will leave her empty-handed when something better comes along.
No clue how much allowance to give? Talk to your friends or take a look at this online calculator from ThreeJars.com, an online allowance-management tool for kids and parents.
Volunteer or donate
It's a classic parent entreaty: "Eat! There are children starving in (insert name of country here)!" Just like grownups, kids need a reminder to appreciate what they have--and nagging is not an effective strategy.
Find volunteer opportunities in your community that allow your child to help those who have less, and encourage him or her to donate old toys, books and clothes to worthy charities.
Explore online resources
In addition to exploring online savings accounts with high interest rates, consider these sources for tools and information:
- The American Bankers Association's Teach Children to Save website includes tips on budgeting as a family and money tips for children. There is also an annual Teach Children to Save Awareness Day.
- TheMint.org is a joint project of Northwestern Mutual with the National Council on Economic Education. The site has sections for young children, teens, parents and teachers. The children's area covers concepts related to earning and saving simply, and it includes calculators.