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Community Corner

How to Teach Your Children the Value of Money

Tips and tricks from Woodridge Patch's mom columnist, Suzy Chudzik.

This week my kids Madi, Isa and Nick turn 11. When I asked them what was on their birthday wish lists, the X-Box and iPads they asked for were a little out of my budget and expectations. I was thinking some Legos, a new hockey stick and a Wii game would do the trick.

When I asked them how much they think an iPad costs, one of them replied, “It’s like $1,000, right?” I pointed out that they are actually around $600 to which I was told, “Only $600?”
 
I can’t blame my kids for not knowing about the value of a dollar and what it can or cannot buy. As I’ve written about , they do earn allowances for doing certain jobs. But beyond that, I really haven’t done anything major to teach them about money.

My oldest daughter Mia, is starting to understand. She earns money from babysitting. We explained that half of it goes into her savings account that she can use for college, a car, whatever – but it has to be saved. As for her half – she uses it to buy clothes, make-up, or whatever she needs.  Like right now she is saving up for a MacBook laptop. When the others start earning that kind of money, they will have to save half as well.

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According to a survey conducted for WalletPop.com, there are disparities in how kids and parents see money. Eight out of 10 parents, and 7 out of 10 kids aged 13- 22 believe the best way for their kids to learn to manage money is to have a budget to work with.

However, only four out of 10 kids report having a budget to work with. Also, nine out of 10 parents of 18- to 22-year-olds said they've discussed financial responsibility with their kids. Ask the kids the same thing and only seven out of 10 18- to 22-year-olds say their parents have had the same talk.

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I checked out the Internet and found some great resources and ideas about teaching kids about money matters:

  • Check out this fun spreadsheet. Instead of calling it an "allowance," this takes the approach that kids earn a "commission" for the work they do. The easy-to-use spreadsheet includes fun charts to show kids how the money they earn is working for them.
  • Play games. A board game like Monopoly or Pay Day is a fun, educational way to teach kids about earning, saving and spending money.
  • Use age as a guide. Check out this article on how to handle money matters with kids at different age levels.
  • If you have young Warren Buffets on your hands, tap into their entrepreneur minds by encouraging them to start their own small business. 
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