Photo Credit: Jewish Press

This past Shabbos, we were visiting with some friends, and discussing how most American frum couples have about $20-$40 thousand in debt. We agreed that people need to learn how to budget when they are younger, before they are slammed with a thousand different demands on their accounts.

With Chanukah behind us, your kids might have amassed a nice amount of cash, assuming they weren’t indulged in presents instead. Why not take this opportunity to teach them about money and fiscal management.

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The first step to teaching children about the importance of saving money is for them to have money to save. I mentioned Chanukah gelt, but this would apply as well to birthday money, afikomen money, etc. Children should be given a small weekly allowance in exchange for daily chores as well. Then, they should be encouraged to physically place their money into a bank account. I recommend opening up an account for each child. It’s a bonus if the children can get an old fashion bank passbook, where they can see their deposits and watch their money grown. In my area, Apple Bank has a very attractive option for children’s accounts. As it is right on our corner, my children are able to go by themselves, with whatever dollar or so they managed to save. The tellers are patient and show them how to fill out the deposit slip. They love comparing their different accounts and see how their money is growing.

Don’t forget to teach them about compound interest, which is basically free money, and one of the most important ingredients of a healthy financial adult life. You’d be surprise how quickly they will catch on.

Of course, there are times when children want to spend their money. I am of the opinion that children’s money belongs to them, and if they want to blow it on junk from the local discount store, that is their prerogative. However, it is a good idea to discuss with them that money has a finite value, and have them think about priorities, i.e. on junk food, toys, friends, etc. This way they can begin to learn how to balance different demands. If they spend it on a stuffed banana, they will have less money to spend on something they really want, for example a souvenir from a family trip, or a Slurpie on a hot summer day.

If you decide to give them a weekly allowance, it comes with two caveats. Firstly, allowance is really payment for a job well done, i.e. chores. As I’ve written about in these pages, my children have daily chores that they rotate so that they don’t get the same job every day. If they do not do their chore, they get their allowance deducted by a dollar. This only applies if they are available to do their job, and simply don’t want to, not if they are not home, or sick and can’t do their job. This quickly teaches them that by doing a job for a few minutes, they will earn money.

The second caveat is that now Mommy and Daddy no longer pay for everything. The best way to figure out what the parents should pay for versus the kids is to determine what a need as opposed to a want is. A need is the basics of food, shelter, clothing, tuition, school supplies and projects, etc. However, a need can also be wanting something that everyone has. For example, if everyone in your daughter’s class has more than one Shabbos outfit, she needs to have more than one as well. She can’t be the only one in her group wearing the same outfit every weekend. What I would suggest is buying her two or three Shabbos outfits, and if she wants more, she can use her own money. The same thing would apply for a friend’s birthday present. If it is standard protocol for everyone to bring a birthday present to a party, then your son needs to bring a present as well. You can give him a budget that you feel is reasonable, and if he wants to spend more, he may.

For example, my daughter is in 7th grade, and has a 1st grader as a “little sister.” The 7th graders are meant to be friendly and help them acclimate to the big building and more formal structure of elementary school, but instead the 7th graders just buy things for the little girls at every occasion. Although I’m not happy with how this developed, my daughter’s little sister can’t be the only 1st grader without gifts. So I gave my daughter five dollars and told her anything more would have to come from her own money, as five dollars is sufficient to buy something yummy and/or cute. My daughter was fine with this arrangement because she has the money to use if she so decides.

Figure out what will work best for your family, but whatever you do decide, the earlier the better. You don’t want them to come to you as married adults, looking for help getting out of credit card debt.

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Pnina Baim is the author of the Young Adult novels, Choices, A Life Worth Living (featured on Dansdeals and Jew In The City) and a how-to book for the Orthodox homemaker, Sing While You Work. The books are available at amazon.com. Pnina is available for speaking engagements and personal consulting. Contact her at pninabaim@gmail.com.