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Teach children to ‘follow the money’

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By Joan Martin

Back to school shopping is happening now. School supplies are in the stores and most families are looking at clothes. Back to school shopping is second to holiday shopping as the busiest season of the year.
It’s a great season to talk about family budgets. One family I know set a school clothing budget for their fifth grade son. They told him that he had a fixed amount of money to spend for clothes. He could choose what he wanted but there wasn’t any more money available. He usually chose expensive brands, which they had purchased for him in the past. The parents thought that he would stick with the same brands but he surprised them. He chose less expensive clothes and got more items. He was starting to understand the difference between wants and needs.
Talking about money is a stressful experience for many families. Usually they don’t talk about it at all unless there just isn’t enough. Involve your children in age appropriate discussions about money. Help your children learn to value money and spend it wisely. When parents never talk about money, the children don’t gain much financial experience before they handle their own money.
Teens and pre-teens can be unrealistic about the family’s financial situation. Follow these tips to help raise your child’s awareness of family finances.
• Be honest about family finances. You don’t want your children to feel insecure about necessities but don’t lead them to believe that you have more money than you really do.
• If you can’t afford something, let your kids know. If practical, help your child find a way to earn money for the item they want.  
• Accept that conflicts will arise about money. Don’t avoid or ignore it.
• Respect each family member’s differences. Try to be flexible about financial decisions. Find some points that you agree on.
• State your own wants, needs, feelings and thoughts about money and be willing to listen to others.
Encourage your children to spend and save wisely by giving an allowance and/or paying for certain chores to be done. My preference was to give a set allowance. If my children didn’t do chores that were expected, then they had to pay me or their sister to do the chore. This seemed to reduce nagging about chores and also increased the association between work and earning money.
Encourage savings accounts for children. Start checking accounts or debit accounts as your child starts to earn significant money or turns 16. Even if they are banking on-line, teach them to balance the account and keep financial records. Teach your child how to track where the money goes. This is an important life skill.
If your child doesn’t do a good job budgeting, then don’t bail them out of bad choices.
Resist the urge to fork over more cash. By learning from mistakes, children’s budgeting skills will eventually improve.

Joan Martin is the Anderson County Extension agent for Family and Consumer Science. She can be reached via e-mail at joan.martin@uky.edu.