Putting your kids on some kind of a paycheck system can help teach them the value of money
Kids have a hard time learning the value of money because they usually get everything they want just handed to them. Even allowances tend to be for menial chores that don’t take much to earn. Putting together a paycheck system that involves hard work can really help teach kids the value of money.
Today’s essay is by Aliya Othman, a student at the University of Georgia. She shares how her parents taught her about money through hard work and a paycheck for her effort.
Check out Aliya’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
Looking for ideas to get your kids working for their money? Check out these work from home business ideas they can start today.
Teaching Kids the Value of Money
Ever since I was a little girl, my parents have taken countless measures to tell me about earning and handling my money. From a monthly allowance to grade money to my first checking account, I owe all of my amateur financial knowledge to my parents’ teaching.
When I was nine years old, my parents began to give me a monthly allowance. They told me that my money was my own, and that I could spend it on whatever I wanted. This did a lot to teach me about the value of my money.
Instead of worrying about how to convince my mother to buy me a new toy or purse, I was preoccupied with saving enough money to afford it. My favorite part about this was the moment that I got to pay for whatever it was I was buying. I felt so mature and responsible as I handed the cashier fifteen dollars to buy a cringe-worthy red purse or some new hand lotion.
Once I began paying for things that I wanted, I also began to realize the true value of money. After one too many frivolous purchases, I noticed that my wallet was empty and that my room was full of items I no longer wanted or valued. I began to carefully consider my purchases before carrying them out, and re-evaluated the things that I wanted.
I still bought a bunch of useless things (as every nine-year-old girl is bound to do) but I valued these items much more than I would’ve if they had just been handed to me.
Want to be debt free or just free of bad debt? Learn the difference between good debt and bad debt and how to get the most from your financial tools.
Giving your Kids a Paycheck to Teach Budgeting
When middle school report cards came out, my parents began to reward me with ten dollars for every A I got. This taught me that with hard work comes a tangible reward, similar to earning a paycheck (without fully realizing it, I was functioning on a commission-based system). In eighth grade, my parents shifted to a weekly allowance system and based the value on my completion of certain household chores, such as emptying the dishwasher and vacuuming the carpets.
In order to collect my allowance every week, my chores had to be finished by the time my mother came to check them on Sunday. This not only held me accountable to a solid deadline, but also put a value on my chores.
As high school wore on, the objects I wanted to buy grew in price (designer shoes, new electronics) and I was saving money for longer periods of time. With every significant purchase, I grew more and more careful with how I spent large sums of my money. Going from $350.00 to $0.00 in exchange for a new iPad was nothing to take lightly.
Don’t wait to start investing! Check out this six-part series on investing by age and everything you need to meet your long-term investing goals.
Now, as I’m headed off to college and about to obtain a large sum of student loan debt, my parents have taken yet another step to enrich my financial education: when I turned 18, I opened up my first checking account. As I continue the next leg of my journey as a young adult, I know I still have much to learn. However, I am not worried because I know that my parents will continue to teach me, as they have been my whole life.
I want to thank Aliya for her essay on how she learned the value of money through an earned paycheck. Be sure to support Aliya by sharing the article through social media and check in August for the winner of the personal finance scholarship.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.