Summer Money For Kids

Well, here we are at summer time.  I can't believe that five months have gone by in the New Year already.  School is out for summer and this is an excellent time to teach your children about money and how it works.  What makes the learning process about money so unique is that it doesn't have to come out of a text book; the BEST money lessons come from LIFE lessons, so the "student" doesn't feel the traditional "pangs" of the typical learning process.

The first step is learning that money doesn't simply appear.  Something has to be traded for it.  Usually time and labor are the bartering tools for money.  If your children are too young to be slinging hash at the local diner, then I would suggest giving them chores to do around the house.  That may already be happening; however, in the summer, there are more things to do that don't normally occur during the rest of the year, such as mowing the lawn, tending to the flower beds, and washing windows, just to name a few.  Pay them for their labor and reward them for their level of performance.  They will learn the difference between doing a job adequately and doing a job superbly.

Young adults will begin to grasp the relationship between time and money.  Most people say "time is money;" I think differently:  money is time.  Simply put, we are trading our time for money and time is what we are sacrificing for the money we earn.  The earlier a person realizes this concept, the better prepared they will be when they get their first job outside of the home as they realize that the commodity of time is something that cannot be replaced, so that time which is given up for money is time that is gone forever.  Thus, the money earned for that time that is gone is precious and should be spent accordingly.

That brings me to the next step:  spending money.  Now that it has been earned and has an intrinsic value, the spending part will feel differently since the money has been earned by THEM.  Teach them to be charitable.  Perhaps 10% of their earnings can go to the charity of their choice; this will teach them that there are people in the world that are worse off than they are.  This is a great eye opener for the child that complains they have to work for their spending money.  The next thing is that they should save 10% of their earnings.  This will teach them that they shouldn't spend all of it and that an amount should be put away for a time when they can't earn it, such as when school starts again and they don't have the commodity of time to trade for money.

Some experts go out on a limb and suggest that children should pay for some necessities, such as toothpaste, so not only they see how much it costs, but also as a type of "tax" on their money.  After all, as an adult, we don't take home EVERYTHING we make since some of our earnings go to Uncle Sam.

This leads into setting priorities.  As children learn about the choices they have to make with their money, they will begin to set priorities since they have only so much to spend, they will realize they can't buy everything they want.  A great way to exemplify this would be on vacation.  Let your children decide whether they want to stay in a posh hotel or participate in a unique activity while traveling.  Let them see the cost of transportation on a trip, the cost of food and accommodations, and the cost of riding a llama in the Peruvian countryside.

The earlier we teach young folks about money and how it works, the better off they will be for life.  Understanding how money works is not just on the spending side, but getting a handle on how it's earned is of paramount importance.  Eventually the young person will see that they are merely trading their time for the things they buy, just like adults.