Guest Contributor Lisa Skordahl makes her home in Coon Rapids, Minnesota with her husband and two wonderful daughters. She works as an accountant and enjoys teaching and counseling in personal finance. She is driven by a desire to help others succeed when it comes to money, no matter their income.

Preparing your kids to live financially smart is one of the best things you can do for them. As a mother of two girls out of high school, I am constantly giving them advice and just hoping they will choose to follow it. Just like many things in life, we hope and pray that our kids will follow the lessons that we try to instill in them until they are out on their own.

If your kids are still at home, it is not too late to purposefully begin helping them learn the importance of living within their means. Even as young as three or four years old, kids can understand simple lessons on making wise financial choices. Teaching kids wise decision- making skills will require a source of income for them, opportunities to make their own decisions, and consistency in allowing them to live within the consequences of their choices.

I suggest that kids are given a commission instead of a traditional allowance, earning money only for items that are completed properly and on time. Set up a plan that works within your family’s budget and be clear from the beginning on what the expectations are. For example, unloading the dishwasher nightly before 6 p.m. earns $.50 per day and if it’s not done on time, it will need to completed before free time is given, but there will be no pay.

Once your child is earning a commission, help them each week to separate the funds into giving, saving, and spending categories. Establish a policy for what items they will be expected to pay for with their income in order to give them decision-making opportunities. This will instill decision- making power in them and help them understand the finality of spent money and the responsibility of making good choices. One of the policies in our family was that if the girls were invited to a birthday party, they needed to choose and buy a gift from their commission earnings. At an older age, one of my daughters wanted texting added to our cell phone plan, and she paid for the up- charge each month with babysitting money.

One of the advantages of training your children to be responsible with their own funds is fewer incidentals hitting the family budget, since many small items are taken care of with the kids’ commission earnings. You will be surprised how creative or generous your children can be if there is something that they want, the choices that they will make, and the fewer items that they will ask for.

As they grow, these choices can increase in scope and eventually, with consistent parenting, you will proudly observe them making great choices on their own with larger purchases. We have enjoyed seeing our girls make many good choices as they navigate the college years and beyond.

By: Lisa Skordahl

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