Today I am honoured to post another ‘Guest Post’ for you. In this post Donna shares her own experiences of how her parents prepared her for the financial world of adult life.
Thanks so much Donna for sharing your personal story with us.
Cheers…Amanda van der Gulik…Excited Life Enthusiast! ;o)
P.S. If you would like to share your own story with us to help inspire others then please send me an email to amanda(at)teachingchildrenaboutmoney(dot)com for me to review.
How My Parents Taught Me About Money by Donna Reish
I’m constantly surprised by how many of my friends were not taught explicitly about money when they were young. In fact, one of my friends says that her family never talked openly about money at all when she was little, and to this day she has trouble managing her finances!
My parents, however, thought it was incredibly important to educate their children about money, how it works, how to manage it, and so on, and to this end they created a kind of system that served as a basic template to how I think of my own money today.
It’s a system that can be easily adjusted according to the needs of your child; as long as you maintain three aspects of it, you should be able to shift it however you’d like.
Basically, the system my parents used helped me manage my money in the short-term and in the long-term. I was taught the difference between ‘needs’ and ‘wants’ and how to budget my money in order to make satisfying my ‘needs’ and ‘wants’ possible.
Chores and Payment
The heart of this system is basic, just like any other tool that you’d use to teach children about money. I was asked to do some chores around the house to help out, and in return, I was provided an allowance. I’m an advocate of this method because it teaches children that part it’s important to help out their family, friends, and community by pulling their part of the load. And it also rewards this activity with an income.
However, the system then shifts a little bit. Instead of simply having an allowance to do with whatever I wished, I had to split into three parts, which to this day forms the basis of how I deal with my money. Of course, it’s not so simple anymore; however this helped me learn some key principles.
First, my parents collected what they called, with their tongues undoubtedly in their cheeks, ‘taxes’ from my allowance. These taxes, they claimed, went towards the operation of the family: helped pay for meals, electricity, and other expenses that were associated with things I often didn’t fully understand, but knew were important to my well-being. These were the necessary things for which my money had pay.
Secondly, my parents took a small percentage of my allowance and deposited in a joint savings account, which they managed and showed me the balance of every so often. I was taught that this savings account as for ‘the future,’ and that it was important to have a reserve of money available for all manner of things, from emergencies to opportunities, such as college.
Once I had paid my taxes and put away some of my allowance for savings, I was allowed to use my remaining allowance for my own personal expenses: small toys, candies, etc. Of course, I was merely a child, so my parents didn’t completely make me pay for everything, but the point is that I learned to budget my money so I could buy the occasional treat for myself. In a way, my parents made the entire act of handling money into a kind of game, and I think that, more than anything else, is what made it more enjoyable to be able to save up for a treat at a store.
That’s it! It’s a simple system, and it’s one that can be changed as needed according to how your family works and plays together. Hopefully this can be of some use to you!
Donna Reish, a freelancer who blogs contributed this guest post. She loves to write education, career, frugal living, finance, health, parenting relating articles. She can be reached via email at: firstname.lastname@example.org.