We could all use a dose of fiscal responsibility...
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We could all use a dose of fiscal responsibility...

Last time we talked about household responsibilities as a way to encourage family cohesiveness, reduce our stress levels, build relationships, and give our kids the practical skills they need to become competent, self-reliant adults.
 
 
This approach involved setting out (generally in the context of a family meeting) all of the activities required to run a family and household smoothly, and parceling out responsibility for those chores in a way that accommodates age, ability and preferences.
 
 
The STEP parenting approach looks at money management in a similar way.
 
 
No matter what a family’s income level or economic circumstance, the desire to raise children who have an appreciation for and ability to handle money should remain true.
 
 
So again, let’s take a peek from our children’s perspective: Mom or Dad walks up to a person (bank teller) or machine (ATM) and asks for money. They come away with some green paper that they then trade for all kinds of fun things: toys, candy, skateboards, clothes, you name it. Or this: when it comes to “paying the bill” a small plastic rectangle gets passed back and forth and voila: all done!
 
 
What of course is invisible in these transactions is the fact that the money needs to be earned and that it is finite—there is no endless cash stream to pay for all the goodies.
 
 
Kids need to be brought in on this whole idea: that money represents value, that it takes effort to acquire, and that it should be parceled out with care.
 
 
Giving kids an allowance, and teaching them to manage money, helps to achieve this goal. A few important notes:
 
 
 First—the allowance amount is discretionary, based on family budget, the child’s age, and what the allowance is expected to cover.—e.g. if they are responsible for buying their friends’ birthday gifts, you might consider a higher number. If they are only expected to pay for their own discretionary items while you pay for everything else, it can be lower. This can and should be decided beforehand.
 
 
 Next, it should be clear that the money is theirs as a member of the family; it should be expressly dissociated from chores or other means of “earning” it. (More on “earning” money later.)
 
 
 Last, and most important—it should be their decision alone on how to spend it. This allows them the opportunity to experience what it’s like to make a spending decision and live with it. “Buyer’s remorse” can and does make a bigger impression on a kid left cash-poor until next allowance day than any lecture you can muster.
 
 
 Lots more next time-- particularly on managing kids' expectations when there is so much pressure to spend, spend, spend--
 
Till then-- what do you do to teach your kids money management skills?
 
 

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