Less Is More with Kids and Money

Less Is More with Kids and Money Basic money management tips are presented in this article to help your children relate to money in positive ways. If you're the kind of parent who's always handing out the bucks to that adorable set of puppydog eyes beseeching up at you -- pocket your wallet now! Make sure your child gets money "the old-fashioned way," advises Bruce A. Baldwin, a practicing psychologist and head of Direction Dynamics in Wilmington, North Carolina. Writing in Piedmont Airlines magazine, Baldwin says that teaching children to relate to money in positive ways is an important parenting skill and constitutes the basic economic education provided at home. First of all, he says, avoid these mistakes. Don't: provide too much "free money" on a daily basis just for the asking; use money coercively to bribe behavior; make promises but fail to pay off in a timely manner; disrespect your child's money by raiding the till without permission. Basic Money Management Skills 1. Negotiate a reasonable chore-allowance ratio -- one commensurate with the child's age, covering basic needs, but without many extras. 2. Use a parental matching system as an incentive -- match funds on a one-to-one basis for items beyond your child's earning capacity. 3. Insist that a certain percentage of money received be saved -- a passbook account in your child's name is good for teaching long-term goals. 4. A child should operate exclusively on a cash basis -- don't let him or her borrow against future allowances or earnings. 5. Within limits, permit your child to make financial decisions -- after they've consulted you (but retain veto power). 6. Do not pay a child in advance for anything -- it destroys incentive for finishing a job. 7. A child should pay for abused or maliciously damaged property -- this teaches personal accountability, responsibility, and cause-effect relationships. 8. Teach your child comparison shopping -- it combats impulse buying. 9. Don't permit your child's self-esteem to become externalized -- by allowing competition to "keep up with the Jones." 10. Blend personal praise with monetary reward -- emotional rewards for a job well done are as important as tangible rewards.