Steps to Teach Your Children Money Management

Here are some suggestions to get you started:

1. Provide children an income to manage.

Children cannot learn money management unless they first have some money of their own to manage. You could provide that through some kind of allowance or through payment for certain tasks. "If your children are spending your money, they're not going to think twice about spending it. But if they're spending their own money, they're going to make much better purchasing decisions," says Erica Sandberg, a San Francisco-based family money management consultant.

She suggests you provide this income at fixed and regular intervals, such as on a weekly or biweekly basis. Make it a large enough amount that your children can afford a couple of inexpensive items at the dollar store, but not so much that they're able to buy a new video game without saving up for it.

How old should your child be for you to start providing such regular income? While preschoolers can start to be educated about what money is, children are not develop-mentally ready to learn how to manage it until they reach age 6 or 7, according to money coach Janet Bodnar, author of Raising Money Smart Kids (2005).

She believes that is the best age to institute a small income. "Not only are children more mature, but they're also learning about money in school," she says. "So they'll know that a $1 bill equals four quarters, and that their $3 allowance will buy a small tub of popcorn, for example."

To prevent children from developing an "entitlement mentality," parents can make allowances conditional—meaning kids get their allowances only if they have made their beds daily, kept their room clean or done other routine chores. Many parents, however, take the approach that children should do routine chores without pay as part of their responsibilities as family members.

Either way, you may also want to give your children opportunities to earn an allowance or additional money by doing household tasks other than their regular chores—such as raking leaves, shoveling snow, washing the car, weeding the garden, cleaning out the basement, washing windows, etc.

This will teach your children to link having money with work. In addition to helping instill a valuable work ethic, chances are they're then going to be more careful about how they spend that money because they know how hard they worked to receive it.

2. Show them how to budget.

Once your children have a regular income, you can begin to teach them to live on a budget. Ideally, set aside some time when you can sit down with your kids and have a focused discussion about budgeting without any interruptions.

Start by explaining that a budget is a plan for how you are going to use your money. Help your kids understand that budgeting is not just sound advice from secular financial advisers, but that the Bible actually points to the necessity of budgeting.
Talk with your children about why it's important to live within your means, tithe and save a regular portion of your income. Discuss the downside of overspending, borrowing and getting into debt.

If you have a budget yourself (and hopefully you do!), show it to your kids, whether it's on your computer or in a ledger book. Help them see what you have in terms of monthly income, what bills need to be paid each month and what will be left over for discretionary spending. This will give your children a more concrete understanding of what it means to budget.

After you've explained some of the basics about budgeting, help them devise their own budgets. First, come up with a figure for how much income they normally have each month through allowances or earned money from household or part-time jobs. Then, help them figure out what percentages of their income should go to various categories—tithes, charitable donations and gifts, spending money, short-term savings, long-term or college savings, etc.

Other than tithes, the percentages for the other budgetary categories are variable. Savings should definitely be a high priority though. Shirley Anderson-Porisch, a financial adviser with the University of Minnesota Extension, encourages kids to save at least 50 percent of their money. That could be divided up between short and long-term savings.

"When children save their money, they learn the discipline of self-control and delayed gratification—vital lessons in today's economic climate," she says.

If you have young children, what works well is to give them a jar for each of their budgetary categories. That is a system that Eva Miller has adopted for her 8 and 10-year-old children. When they receive money, they distribute it into each of the jars, according to the designated percentages.

"Once they put money in their tithe or college savings jars, that's where the money stays—until it reaches $20 and then the tithes will go to our church, and the college money will be deposited into their savings accounts at the bank," she said. "They also have jars for short-term savings, and they'll use that to save up for things like a new game, and 'fun money,' which is what they use for everyday expenses like buying a candy bar at the grocery store."

If you have preteens or teens, you can set up their budgets on the computer or get them their own ledger book. Have them record their expenditures each month, and keep a running total of how much they've spent in each budgetary category. This will help them see on an ongoing basis if they are spending too much.

3. Use everyday opportunities to teach your kids about money.

Life brings countless opportunities to teach our children about money. Consider, for example, the story mentioned at the start of this article. That situation was the perfect way to begin a discussion with my son about money. While we were still at the store that day, I took Danny aside and spent a few minutes explaining to him how my husband and I obtained our money and that we didn't have an unlimited supply. (I also explained what it meant to counterfeit money!)

You will probably have your own "teachable moments" that you can turn into money-management lessons. If your child notices you paying your restaurant bill with a credit card, that is the ideal time to explain how credit cards work—that it's in effect a loan that must be paid back within a month to avoid interest charges. Preferably you already have the money to set aside as repayment so that it's just a matter of shifting funds and not borrowing what you don't have.

When your credit card statement arrives in the mail, show it to your kids. Let them see how interest is computed and compiled, and explain why it's important to not rack up credit card balances that can't be paid off immediately, so as not to waste money paying interest.

If your children are with you when you withdraw money from an ATM or write a check at a store, that's an opportunity to explain how checking accounts work. If your children are with you on trips to the supermarket, talk about your purchases as you shop and what makes something a "good buy."

If you're watching television with your kids and a commercial makes an outrageous claim, use this moment to talk about how to evaluate advertising. If you get "too-good-to-be-true" offers in the mail, that's the time to talk with your children about scams and that "you don't get something for nothing."

These kinds of teachable moments are effective, because they are real-life examples. Your children can see for themselves how a financial principle you are trying to teach them can be applied in everyday life. That makes your lesson seem much more pertinent.

4. Learn to say "No" to your child's unnecessary wants.

Children are usually quite adept at pleading with their parents for toys, electronic gadgets, designer clothes or other nonessential items. When they do, it's not always easy to tell them no. Most parents don't want to be the bad guy, nor do they want to deprive their kids of things others have. Still, Sandberg says, "You shouldn't cave into your kids' every whim—even if you can afford to buy them what they want, but especially if you can't."

Learning that you don't get to fulfill all your wants is an important life lesson. "Children need to experience some disappointments, because that's part of life," says Michael Gutter, Ph.D., family financial management specialist at the University of Florida. He suggests you explain to your child that there are things you would like to buy, too, but can't afford. "That way he knows he's not singled out; he's not the only one not getting what he wants."

Even if you can afford to buy these kinds of items for your children, you should still be very selective about how many of their requests you grant. "If you overindulge your children, they're not going to know what it's like to have to work hard and save up for things they want," Sandberg says.

One way to respond to pleas for nonessential purchases is to tell your child he or she cannot have the item now, but could request to have it as a gift for some special occasion. Or, if you have teens or preteens who are old enough to pay for a lot of their "wants" themselves, you can encourage them to either save money from their allowance or do extra household chores to earn the money.

If it's a matter of your teen wanting to spend more for a "need" than you think is reasonable—e.g., he wants the $100 skateboard shoes when you've only budgeted for a $50 pair of sneakers—you could tell him you're willing to pay the amount you had earmarked in your budget, but require him to come up with the difference. "This will help curb feelings of entitlement," Dr. Gutter says, "and make your teen personally responsible for achieving his desires."

Teach Your Children Money Management

How often do you have discussions with your children for them to understand money management? Do they understand basic concepts such as saving, budgeting, borrowing and debt? Use these helpful tips to teach them!

My brother, Promise is 11 now, but I still vividly remember a particular shopping trip with him when he was 8. We were in the electronics aisle at a discount department store. I had my back to him for a few moments while I tried to figure out which camera battery I needed. When I turned around, I saw Promise plopping a 12-inch television into our shopping cart.

"I'm going to buy this," he announced.

"We don't have the money for that," I quickly replied, and then picked up the TV to put it back on the shelf.

Immediately Promise hollered, "But uncle, I have the money!" Then he opened his billfold to show me his wad of handmade $1, $5 and $10 bills. Earlier that day, Promise, who has always been quite an artist, had used some of the currency in my wallet as models to meticulously draw copies of the bills on white construction paper. He then colored his bills with green and black pencils and cut them out. They looked surprisingly like the real thing. I had assumed he was going to use his homemade currency to play "store" with his younger brother. But on this shopping trip, I realized that was not the case at all. Promise thought the way you "made" money was literally by drawing your own.

Let us talk about money

The whole thing really took me by surprise. I would have never thought Promise had those kinds of misconceptions about money. It made me realize it was time to have some talks with him about money—how it's earned, how to use it wisely, and why it's important to be good stewards of what God has given us.

What about you? Do you talk to your kids—teens and younger children alike—about money matters?

We were told in Deuteronomy 6:6-7

: "These words, which I am commanding you today, shall be on your heart. You shall teach them diligently to your sons and shall talk of them when you sit in your house and when you walk by the way and when you lie down and when you rise up" (New American Standard Bible).

The Bible has a lot to say regarding how we should be using our money. It follows, then, that we should be passing these financial principles on to our children and teaching them at least the basics of personal money management.  

The current worldwide economic downturn adds even more urgency to doing so. "Kids know we're facing tough times, but they don't always understand how we got there," states Karen Varcoe, Ph.D., consumer economics specialist with the University of California Cooperative Extension. She believes the vast majority of parents are not talking with their children about money management. Instead, kids are getting their "lesson" in personal finances by simply watching their parents.

Dr. Varcoe continues: "What they're seeing is most everything being purchased with a credit card or check. They don't see cash very often. This can give them the false impression that the family has an endless supply of money. And indeed, when we use credit cards instead of cash, we generally spend more than we should."

This kind of overspending not only sets the wrong example for kids, she says, but was certainly one of the root causes of the present global economic crisis. It's also the reason so many people found themselves in dire financial predicaments this past year when the U.S. economy nose-dived.

"You need to be telling your kids how to save money and spend it wisely, and why it's important to not misuse credit, so that their future financial stability isn't in serious risk, as is the case with so many people today," she urges. This teaching can begin as early as age 3 or 4, or whenever your child begins asking about money. Your lessons will be very basic for preschoolers, perhaps, just explaining that you have to work hard for your money and that it doesn't "grow on trees." As your children grow and mature, you can gradually get into more in-depth instruction. What if your kids are teens and you've never talked with them about money management before? "It's never too late to have these kinds of conversations," Dr. Varcoe says, "but the sooner you do, the better it be."

Teaching Children Money Management

HANDS-ON EXPERIENCE

Managers are made not born. That is why it is necessary for parents to give their children hands-on experience. Children’s experience can include getting involved in the way their parents manage their money. Before the age of five or six, children have difficulty understanding the relative value of money. Give them a choice between a $10 and $5, and they would likely choose the $10, it is appealing to their senses. Also, they have little or no concept of planning ahead, an essential element in the process of managing money. By the time children get to grow up, they usually know that $10 will buy more than $5, what they need are experiences to help them make life-style choices about quality and quantity and planning beyond the present moment.

With young children, arrange for them to shop on their own, the small personal items you normally buy for them. Suppose a six year old needs two or three items for school. On entering the store with your child, determine how much the item will cost. Give your children enough money to pay for the purchase, guide his or her choice of the right quantities by explaining the quantity price difference, and then let the children pay for the items. There are least three immediate values of benefit to planned shopping with children. It teaches them the money is to be exchanged for what people needs. Guiding young children shopping helps them to make wise decision about quantity and later about quality. The first experiences help develop the third, that of learning to plan ahead. By age eight or nine, children can usually manage a small allowance received once or twice per week. Allowances are an excellent ways to give children hand-on experience in managing money without much investment or risk-taking. The basic principle for providing a child an allowance to manage is freedom. An allowance should be for child to manage. Parents can establish the ground rules at the beginning, and what necessary expenses are to be expected from the allowance. But for a child to learn money management there must be freedom to make mistakes. It is generally accepted that child guidance should be all encompassing. A child should be taught moral values, economic values and formation of good habits. Of all these, the most neglected by parents is the teaching of economic values, which includes money management. Yet it is very important. Many have failed in business and in life generally because they were not taught how to develop and maintain a disciplined art of spending and the science of savings and investment.

Therefore, a child should be taught the following about money management:

1.      Guide your child to have the right attitude about money to see it for it is, a means of exchange. It ought not to occupy his heart.

2.      Children must learn how to earn money while still at home. They can do this through holiday jobs and special assignments given by adults for which they should be financially rewarded. No one is capable of spending money wisely who has never earned money. Always getting something for nothing prompts irresponsibility.

3.      Teach your children to spend money wisely.

4.      Teach your children how to save.

Most recently, many of our children roam the streets during holiday while they wait for admission into higher institutions or they wait for their National Youth Service call or even admission into Law School. They should engage their hands in doing something useful or learning a trade, sewing, baking, panting, sign writing, carpentry, photography, computer operation, selling, public speaking, drama, etc. You never know how, who God will use such to bless in the future.

The value of the parent’s guidance in developing good money management practices in their children has been referred to several times; it is absolutely necessary. In reality, there is a prior step that informs parent’s guidance as analyzed above.

Practical Ways To Indirectly Get To The Top Of Search Engines

There are millions of web sites trying to get listed in the top 20 of the major search engines. That amounts to a lot of competition! I say if you can't get listed at the top, indirectly get to the top.

How do you do this? Look up the top 20 web sites on the major search engines under the keywords and phrases people would find your web site. The key would be to then advertise on those web sites.

The most expensive way would be to buy ad space on those web sites. If you don't want to spend any money, you could use the strategies below. These strategies may not apply to every web site.

How To Make Visitors Stay At Your Site Longer Than Expected

Provide a huge online directory of information that your visitors could search. The directory must contain information your visitors would want. Provide your web site visitors with content they can't read anywhere else. People will stay longer at your web site to read the original content. Remind your web site visitors they can print out your content. They may browse around your online store while it's printing. Offer your web site visitors a freebie if they take the time to fill out your online survey. They'll be at the site longer and might buy something afterwards.Make sure all your web pages load fast or your visitors will leave fast. Time is precious; they won't waste it waiting for your site to load. Tell your visitors what's offered at your web site at the very beginning. If people are confused about what's being offered they may leave too early. Use headlines and sub headlines all over your your web site that will grab visitors attention. It will attract them to explore your web site longer.Publish your web site professionally. People will get turned off and leave if they see a lot of spelling and grammar mistakes.Make your site text easy to read. Most people won't strain their eyes trying to read text that is too small, light or bright. Be very creative too.