Consumer Watch: How to teach kids to pay for their fun
OKLAHOMA CITY (KOKH) —
Should you make kids pay for their own stuff? The personal finance specialist consensus is a resounding yes. You can start with an allowance, and teach them lessons that will last a life time.
From mowing the grass to washing dishes, an allowance that comes after doing chores is one of Justin Cupler's favorite ways to start teaching kids about money.
“So, they don't think when you go to the ATM, (put the) card in that magical machine. It doesn’t just throw free money at you. That money came from where. Your parents went to work. They earned that money,” says Justin Cupler, personal finance contributor at The Penny Hoarder.
Chores for money is only part of the learning process. After giving kids an allowance, introduce them to the three jar method: the giving jar, spending jar, and savings jar.
When kids get their money at the end of the week, have them put percentages of your choosing in the giving and saving jars, and then they can have fun with the rest or save it for a bigger purchase.
“The three jar method gives them the opportunity to watch each jar grow and change with their tendencies of spending and saving, “says Cupler.
Kids should have an expectation that if they want to do something special on the weekend with friends,
or buy a new toy, they need to use their allowance money. If they over spend, then they might not be able to do anything the next weekend.
“Your five and six-year-old, you are not going to be har line with them. If they screw up, you are going to sit them down and explain to them what they did, and guide them through the process,” recommends Cupler.
As kids get closer to working age, though, it is a good idea to be a bit more hardline if they make the overspending mistake.
Practicing these financial habits early on will ensure they come second nature to kids when they go off on their own.