So – are you ready to move ahead with that simple way to teach kids about money?

I'm sure your kids are pretty eager to get some money in their hands so they can finally buy all that stuff you've denied them all these years (oh you're such a cruel person!) - but before you hand over one thin dime, I recommend you teach them how to make a budget first.

Their budget is going to be a bit different from yours though, so here's a few tips.

1. Of course, start by telling them how much they will get and when. If it's $10 a week for doing chores, then write that down on a piece of scratch paper and do a little multiplication to show how much that $10 weekly will be in the future. Let them dream of having $520 in a year and all the things they could do with it. Encourage that imagination!
2. Get out a calendar and mark their friends' and family members' birthdays, religious gift-giving holidays, Mother's Day, Father's Day, Valentine's Day, and any other day they might want to get a gift for someone. You could go the way of making up an arbitrary amount for how much they could spend on each gift, but it might work better to be a bit more methodical.

   It's typically best to spend up to 30% of your expendable income on gifts or charity – so figure out 30% of their “income” and divide by the number of gifts they would need or want to buy (don't forget Christmas and Hanukkah are multiple-gift affairs!) to get the sum for each gift.

Feel free to adjust that number as your child needs or wants, providing recommendations like “you could probably spend a little less on a gift for mom on Mother's Day, since she would love it if you made something with your hands” to help them out. Then, come back in a couple days to see the next part ;)

Patricia Mayo also blogs about effective communication, and is working on a free ebook to help you get a great virtual assistant at an unbelievably low cost.

Article written on July 21, 2008 9:13 AM