Author: Denise Hill / Source: Wise Bread
A young mother named Essence Evans recently posted on Facebook that she charges her five-year-old daughter $1 each for rent, utilities, food, water, and cable out of her weekly $7 allowance. The remaining $2 is the child’s money to spend however she wishes. The $5 that Evans takes for “bills” actually goes into a savings account she’ll give to her daughter when she turns 18.
The internet went berserk. Some people loved this idea, while others thought it took things too far. Whether you agree or disagree with the method, something has to be said for the initiative Evans is taking to teach her young daughter money management and the value of a dollar.
Should you follow her example and charge your little ones “rent?” Here are five important lessons you’d be teaching them by having them “pay bills.”
Financial responsibility
From birth until death, you need and deal with money in some capacity. The earlier you learn how to earn, spend, lend, borrow, and invest, the better off you are. By making your little kids pay for living expenses, you teach them very early how to handle money responsibly. It helps them begin the journey of distinguishing wants from needs and prioritizing taking care of their needs first.
Before your child is allowed to spend any money, they should be required to “pay their bills” and set money aside in savings of some sort. The action of giving money to them and having them give a portion of it back is a powerful lesson in and of itself. It becomes a normal part of having money. You teach them to save and pay their bills first, which is a powerful tool in keeping them out of financial trouble later in life.
(See also: 4 Parenting Mistakes to Avoid When Teaching Kids About Money)How to budget
Making your kids pay bills before allowing them to spend their money on things they want teaches them the power of budgeting. Budgeting is all about setting priorities and planning. Budgeting teaches them that they can have some of the things they want if they plan correctly. It also teaches them that they cannot afford all of their wants. It drives home the point that there are certain bills that they will always have (rent, utilities, groceries) and they should always plan for those recurring expenses.
Teaching them these lessons in a controlled and loving environment is so much more humane than…
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