With all the talk in January about taking steps to kick bad habits, engage in healthier habits, and, in all things, do the best we can, don’t overlook money matters.
Now, as the recession deepens and unemployment rises (currently at 6.8% here in Montgomery County), it is more important than ever to teach our children, and remind ourselves, that we must make money decisions smart.
Every decision we make – when to charge or pay cash, what to buy right away or put on hold, and whether and how much to save – matters and serves as a lesson to our children. All this, together with the payment of our invoices on time.
At the beginning, Santa Claus, the Easter bunny and the tooth fairy take center stage, making gifts and money appear as if by magic. But over time, as our kids get a little wiser, those characters lose their grip and the realities of wanting something and having to pay for it come into play more starkly.
Money doesn’t grow on trees and nothing is free: a message well taught by a piggy bank and an allowance. A reasonable allowance, that is. As he waited for his school bus the other day, a local seventh grader explained that he hadn’t received the device for Christmas. Instead, he had bought it. “It’s not a big deal,” he explained. “I get $50 every week.”
And speaking of an allowance, singles and some change work best, so that at least a dollar and/or a few coins can be kept and stored in that piggy bank each week. Add monetary gifts, too, so most of it isn’t spent right away.
Then consider adding interest to your child’s savings each month, explain the concept, and show how it’s also included in their monthly statement balance.
Then make the piggy bank better and open a savings account for your child at your local bank. Now saving becomes official and a very adult activity. There is nothing more attractive than having a savings book and seeing the balance grow with each deposit. Plus, it helps make saving a habit for life.
As your child grows, provide her with an expandable file folder, too, so she can keep track of her purchases and keep her receipts, just like you do for tax purposes. Being responsible is a worthwhile goal.
In the meantime, don’t get carried away buying everything your child wants. Wanting something is not the same as needing it. In fact, very often it is just a fleeting fantasy, attractive because “everyone has one”, at least for the time being. Go with no when you count and model the behavior you expect to see. In other words, save up for that flat screen TV instead of just charging it to your credit card and worrying about paying the bill later.
Be sure to also teach gratitude, along with economics. Sit down and study the circulars together, looking for sale items and reduced prices on essential items like groceries. Check costs in different markets, too, and then shop together, comparing prices across brands and store-brand products as you go.
Then take some cost-cutting steps around the house. Your child needs to realize that their hard-earned income should not be wasted on energy-wasting options. Together, head to a hardware store and invest in simple items that will save you dollars right from the start; then get to work as a team. Start by installing a low-flow showerhead to reduce water usage and heating costs. Then there’s rope caulking, which is easily removed, to seal drafty windows. And don’t forget to switch to fluorescent bulbs; each can last up to 10,000 hours and replace 10 regular light bulbs.
Do you want to do more around the house? Find professionals who can help you with more complicated upgrades like installing ceiling fans, installing low-flow toilets, and insulating your home. Being energy conscious is good for your budget and comfort, while helping the environment and teaching your son or daughter valuable lessons about money management.
And don’t forget charitable donations, both monetary and temporary. Talk about your favorite organizations and how you pay attention to their annual appeals with a check whenever possible. Explain to him how he can make a difference by contributing something from time to time.
Finally, whenever you can, serve as a role model by volunteering. Organizations like Cradles to Crayons and Startin’ School in Style can use his help, as well as his son’s.
Remember: as guides, we parents owe it to our children to teach them how to save money and spend it wisely, reduce waste and give it to others. That, by definition, is true success.
