My children, ages 8 and 3, received some of the “green stuff” in their Valentine’s Day cards yesterday from their grandparents.  They each have $12 burning holes in their pockets now.  While I appreciate my parents’ efforts (and those of my in-laws) to not send MORE sugar into our house, the money issues are rearing their ugly heads today.  The good news is that I get to teach my children a bit about the responsibility that comes with money, and it looks like today’s a good day to start.

My 8 year old is already quite proficient at budgeting and spending.  He has been receiving an allowance for a couple of years now, and he is diligent in using the budget we created for him.  10% of everything he gets goes into the offering plate at church each Sunday.  Of the money left, he puts 40% in his piggy bank and 50% in his wallet.  The money in his wallet is his to spend…on toys, balls, a new video game for his system, baseball trading cards, a gift for a friend…whatever he chooses. 

The money he puts away into his piggy bank is not “untouchable”, but it requires a family meeting in order to bring it out.  For almost two years, he never asked about the money he put away, but when he wanted a very expensive toy after Christmas, we sat down with him and made sure he REALLY wanted it (he had been asking for it for almost a year), then we counted his savings.  He very easily covered the cost of the toy all on his own.  What an amazing feeling for him to walk into the store with his own money and purchase something so valuable to him!  And what an amazing feeling for us not to have to pay for it!

With our younger child, though, the process is a bit different.  He doesn’t receive an allowance, but he has accumulated quite a little kitty of money.  We use a similar budget for him, but his “income” is quite sporadic (gifts are pretty much it!).  However, he still puts money in the offering plate, we put a bit of money into a piggy bank for him (it is more like 20-25% of the total amount) and the rest is his to spend – within reason.

Taking him shopping, we have an idea on what he should spend his money.  For instance, this morning we will be visiting our local discount store to look for a new DVD in a series he enjoys.  He will get to choose the title.  I am not going to set my three year old loose in the entire store with money to spend; we have a few items that he has said he would like, and we will go and choose one of those to purchase today.  He enjoys the thrill of independence while shopping, and I still am able to garnish some control as to what he purchases.  He will be the one to put the money on the counter, and he will be the one to take the receipt and the bag out of the store.

While my boys are both on two very different planes of learning when it comes to budgets and spending, I think it is a very valuable lesson for children to spend their own money with guidance from parents.  Children learn by example, by experience and with a little assistance.  Making it a positive experience creates a healthy and smart consumer later on!