You cannot follow the principle of “Do as I say, not as I do”
to teach your child about money. Children learn their buying patterns
and attitudes toward money from the actions of adults in their household.
Many of the media messages that children see and hear tell them that
spending increases happiness and popularity. The National Institute
for Consumer Education recently reported that $12 billion worth of
advertising is aimed at children each year. American children spend
over $166 billion each year and directly influence their parents to
spend another $250 billion.
Dr. T. Berry Brazelton believes that parents need to begin teaching
good money habits by setting limits around age two. Dr. Brazelton
feels this helps children develop self-control and learn how to delay
gratification. Learning self-control will help them avoid growing
into “big spenders”.
Children can learn responsibility and a sense of family teamwork as
early as age two. They can help with simple household tasks that do
not create a safety hazard for the child. For example, they can carry
silverware and unbreakable dishes to and from the table.
By the time a child is four, she can begin to earn an allowance for
helping. Children at this age can also identify goals such as a much-wanted
toy, a video, or a trip to the movie and to save to accomplish the
Holidays and birthdays also provide opportunities for saving. When
a child receives money as a gift, she can be encouraged to save at
least part of it to buy gifts for others. Children four to six years
old really enjoy shopping for gifts with their own money.
Parents can develop their preschool child’s decision-making
skills by offering the choice between two cereals or other foods they
really want to buy. Explain how the products are different such as;
how may servings are in each box, the difference in the taste of the
two products, and even what health benefits each provide. If a child
makes poor choices talk with him about what he would do differently
when given the same choice in the future.
Parents should look carefully at their own money habits. The way parents
prioritize spending; saving, and sharing will be reflected in their
child’s behavior. When parents using shopping as way to feel
better, children learn the same behavior. This is one of main reasons
people over-use credit and become “credit junkies”.
Talking about saving and sharing provides the opportunity for children
to learn how sharing enriches their parent’s life and how saving
generates wealth. Piggy banks and youth programs sponsored by financial
institutions help children learn about saving.
Parents can model values such as sharing, thrift, and determination.
Volunteering for a food bank or other charity organization with their
parents can help children develop a sense of sharing. Enjoying free
or inexpensive outdoor activities and checking books out from the
library can teach thrift. Participating in sports activities and caring
for pets can develop self-reliance, determination, and the ability
to deal with adversity.
Dr. Brazelton suggests two important money beliefs children should
learn by parental example:
These beliefs combined with sound decision-making skills, goal-setting,
and self-control can avoid the prediction made by Federal Reserve
Chairman Alan Greenspan, that America’s children may become
“a generation of financially illiterate people who are not equipped
to inherit the global economy”.