The Secret To Child Money Management

     There is a secret to how your child views money.  You want your child to understand the responsibility of money.  

     Here is the key. Allow them to earn their own money. When they want something that does not fall in to an every day need they can pay for it out of the money they earned. You can give an allowance or have them start their own business. Make the child aware that if they spend the money, they must create more.

     When parents just give money to the child they take no ownership of it and believe that there is more “out there” so they rely on you, credit or loans to pay for their lifestyle. In our program they address the lifestyle, because they have to. If they run out of cash, they have to create more. They do not have a visual in life that there is a limitless supply of money. They understand through life lessons that they have to save to get what they want.

     Let me give you an example. Say your child wants a candy bar. Usually we as parents decide whether to pony up the money or not. The child’s only concern is do they want that candy bar. When they have their own money, they may not want to spend their last two bucks on a candy bar and pop. Now the child is thinking a whole different way. Instead of just being responsible for wanting the candy bar and soda, now they have to make a decision. Do I spend this money on this or save it for other activities?

     Children take better care of toys they bought for themselves because they feel like they wasted the money if they didn’t. If you buy it, it does not mater because they put in no time to get the thing they wanted therefore they have no ownership in that item. Conversely when they buy an item they respect it a lot more and take care of it better.

     The other change that is instilled in the child is the thought process surrounding money. In the child’s point of view money has an abundant source…you! Whenever they cry enough or beg for it enough they know they will get it. This mentality leads to what we call the entitlement mentality. Where people think they are owed a living. That if they complain enough or ask enough someone will pay their way. When a child has to create money they take ownership of the rest of their life. They know what to do if they want something and it does not involve a FICO score.

     They understand the limits to the amounts of money they make are reflective of how much they try to create it. This thinking leads to creativity, goal setting and true self esteem.

     The secret is financial responsibility. Your child may not be able to say it but they will understand it. Life is the best teacher. Let life teach them about money.

      This is just one of our many course topics designed to help you and your child design the life of their dreams. We will be publishing more tips soon so check back often.