Money management is an important skill, especially in this day and age. Today, when so many basic things are so expensive, it’s a good thing to know how to stretch a dollar. For kids especially, I think this is an important thing to know. How many times does your child beg you to buy them a toy and refuse to let you get them the (almost) exact copy for several dollars less? I know that was a somewhat regular occurrence in my family.
If you teach your kid how to mange money well early on, it will benefit them in the long run. Ever heard the phrase “Can’t teach an old dog new tricks”? Same idea. If your child grows up without having to think about spending money wisely, it will be that much more difficult for them to learn when they’re older.
One of the most effective (And fun!) ways to start teaching your child about managing money is to let them plan their own birthday party. When I was turning ten, my mother gave me a budget of $100, and told me that I had to plan my party using only that much money. She would help counsel me, but in the long run, everything was up to me.
I was thrilled. $100?! You could buy a palace with that… or so I thought.
My mom helped me budget out how much each thing should get (goody bags get $30, the cake gets $10… etc.), and then took me to the store. It didn’t take me long before I realized that $100 wasn’t as much as it sounded like. Things were way more expensive than I thought, and in order to keep the cost within the budget, I was forced to think very carefully about where each dollar went.
After the party, I not only got to keep the $60 dollars left over, but I also got positive comments from all of my friends about my party. Turns out that $40 could make a pretty good party.
In order for this plan to work for you and your child, there are a few things you have to do before hand. You have to decide a reasonable amount of money, you have to get a different mindset, and you have to make sure your child knows that the amount of money you let them use is not going to change.
First of all, you have to decide the proper amount of money. To do this, you have to make sure that you give them enough to have a good party. This knocks out any $10 parties. On the other hand, you have to make sure you don’t give them too much money, or you’ll find yourself paying for a far more expensive birthday party than you thought you would be. At least when I was 10, $100 was a good amount. One of the ways you can make this amount of money last longer is to take your child to the dollar store, because, really, if your guests are small/smallish children, they aren’t going to care that their treats came from Dollar General. Another way is to check the sale isles of Target, Walmart, Walgreens, or even craft stores.
Secondly, you have to get a different mindset. Instead of wanting to control your child’s decisions, or trying to keep them from spending too much money on one thing… let them. After all, if Mommy or Daddy are just going to say, “No, that’s too much”, then they really don’t have to really think about how much they should be spending.
You should also make sure that they know, early on, that the amount of money you give them is not going to change. This will ensure that you will not get any requests for giving them more money, halfway into planning the party.
Money management is an important skill for your child to learn, and it really can’t be learned too early. The “birthday party approach” is one of the things that I have personally observed to be effective. It can be fun for both you and your child, as you find out how much you really don’t need to spend, in order for a birthday party to be a success.