Mom Is not an ATM

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Do your kids think money grows on trees or that you can simply go to the bank and the money magically appears? We all know it isn't that simple so why shouldn't they? Here are some tips to teaching your children the value of money and how they can learn to budget their own.

The Frantic Search
There was total panic in our house on the night we lost our last $100 bill. It was the end of both our pay periods. That single unit of currency was all we had to feed and finance our family of six for the next four days. And it was gone. At first, both my husband and I asked each other, "Do you have the change from that hundred?" When we each said no, we synchronized checking our wallets. His held five ones - mine contained three quarters, three pennies and two grocery store receipts. No 100 dollar bill.

Massive searches - under beds and in drawers - were conducted through our house. Just as we nearly determined we had been robbed by a very clever thief, a small voice said, "I know where your money is." This was hardly our attorney or financial consultant. The voice belonged to our five-year-old, Alyssa. "What did you say?" we asked anxiously. At first, she just smiled blissfully, basking in one of those rare childhood moments when she enjoyed the complete attention of two somewhat frantic adults. Then she went into her bedroom and returned with her ceramic horse piggy bank. Feeling silly and indulgent, I reached inside the horse's tummy - and found our missing hundred dollar bill.

"Wha - what?" we both said. We were speechless with a combination of relief, wonder and disbelief. But Alyssa's reasoning was simple and straightforward. "I'm going to buy that big thing of Fruit Stripe gum," she said.

As a frequent financial seminar presenter, author of the book Rich On Any Allowance and father of 12 children, Clint Combs has known for 20 years what I discovered on that frantic night -- that children of all ages are motivated by money. Combs and other monetary experts offer the following perspectives on how to help children learn money skills at an early age that can help them stay financially fit for life.

Consider Your Own Money Management First
As simple as it sounds, during a quarter of a century of helping people manage their finances, Combs has observed that when parents are not using some form of budgeting, their children, likewise, almost never will. He advises parents to "get on a budget and save 10 percent of your income before you teach your children. When parents are on a budget, children see the harmony about money from Mom and Dad, and learn that handling money is a knowledge and skill that you can acquire."

Provide Your Child with a Source of Money
In her book, Money Doesn't Grow On Trees, Neale Godfrey explains children need a source of funds to use as a tool for learning to manage money. Both she and Combs agree that this funding source is most often an allowance given by the parents. Combs explains that in the traditional post World War II Baby Boomer family, an allowance frequently became a tool to inflict change in behavior rather than teaching kids how to manage money. "It became a leverage for obedience. If a kid stayed out too late or his grades were bad, parents took away his allowance."