| 4 money lessons for children to master |
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"There are citizen-of-the-household chores where they don't get paid. That is keeping your own personal space clean, picking up wet towels, getting up on time, brushing your teeth, making the bed," she says.
"And there are work-for-pay chores, so what you are also doing is teaching kids how a household works," Godfrey says.
The system Karp outlines in his book is similar, but he prefers to keep allowance separate from chores altogether.
"Keep the spending lesson separate from the earning lessons. You do need earning lessons, and you can do that by offering a list of things the kid can do for extra money," he says.
"If you tie it too closely to the chores, you may have the kid who says, 'Well how much are you going to pay me to make my bed,' or just doesn't do it altogether. And then the whole system just crumbles," says Karp.
Additional chores can be offered for extra money so that kids learn to work for their pay -- and that way they can feel a little more in control of how fast they'll be able to save up for special purchases.
Delay gratification
Saving can help children develop their ability to delay gratification and learn to save for a goal. Both are important later on when young adults can apply for credit cards or loans.
Dividing savings
buckets into long- and short-term goals can also
help kids realize that saving isn't just about spending
at some point in the near future.
In Mackey's 10-10-10-70 system, the 70 for spending includes money that kids want to save for a short- or midterm goal.
It's not actually saving if they're just putting away money for something to spend on in a week or a month or whenever they have enough money, she says.
"They're not actually saving anything, they're just prolonging their spending," says Mackey.
Putting away money just for the sake of having a financial cushion is a routine that every person would do well to follow, and the earlier that concept sinks in, the better. It's a lesson that eludes many adults.
Build on budgeting
As kids get older, the lessons can grow more complicated if you think your kids are ready to take on more responsibility.
For instance, Mackey recommends figuring out how much you spend per month on children's nonessential expenses such as CDs, trips to the movies and cell phone bills.
"We've been doing a survey on this and finding that it can go from $25 to $400 a month for nonessential purchases that kids don't need to survive," she says.
She suggests that parents cover the necessities such as clothing, food, education and shelter and allow children to earn money for the extras that parents generally buy.
"You assign chores for that money, and then when you go out into the marketplace, they use their own money. I guarantee you that they will not spend their own money like they spend your money -- ever," Mackey says.
If kids can master these lessons on a small scale with their allowance, then they'll likely have the discipline and money skills to resist the lure of credit and living beyond their means later on as adults.
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