Money Rules For Your Kids

All too often, kids end up having to learn from their own mistakes about how to handle money, because nobody formally teaches them how to handle it .  Sure, they can observe their parents’ behavior towards money but it seems to be a rare occurrence for parents to actually sit down with their kids and teach them about proper money management.  As a result, many young adults just starting out on their own end up with overwhelming credit card debt or simply get behind in paying their bills as they haven’t yet learned how to handle the expenses that were once all taken care of by their parents.

In order to prevent your own kids from feeling lost when they first set out on their own, start to teach them when they are young.  According to Jeff D. Opdyke’s article “The 15 Money Rules Kids Should Learn”, there are a lot of things parents can teach their kids at a young age.

Some of the money rules he suggests include:

“Children should have the right to screw up financially so that they can learn from their mistakes.” I agree.  Sometimes the best lessons are learned the hard way, and it sure is a lot better if they can learn these tough lessons when they are still depending on mom and dad to provide for their basic needs instead of making these mistakes when they are out on their own.

“One of the greatest gifts you can give your child is your own financial self-sufficiency when you’re old.”  Amen.  If you depend on your kids to support you when you are old, they will not only be burdened by their own immediate family’s expenses, but they will have to find a way to support you as well.  This will likely cause a significant amount of financial stress on your kids.

“Good grades are expected and help around the house is simply the price of family life.” Although monetary motivation may not necessarily be the best way, sometimes it’s the only way parents can get their kids to work hard on their grades and do chores around the house.  This is a tough one, and I think it really depends on the parent’s discretion.  Every kid is different.

“While 16 is generally the legal age of employment, encourage kids starting around age 13 to think of ways they can earn an income.”  I think this is a good idea as it promotes creativity and ingenuity.  Encouraging your kids to set up a lemonade stand, or to babysit or cut the neighbor’s grass teaches a work ethic and gives kids a sense of satisfaction in earning their own money.

“Parents don’t have to save every last dime a child will need for college expenses.  You only have to save up to your ability or desire to pay.”  I think this is a valid point.  Why should parents be expected to fully pay for their children’s education?  That’s what summer jobs and student loans are for.  If you do want to save for your kids’ education, a great way is to take advantage of government grant money when you contribute into an RESP.