Money

Suze Orman a financial expert was on Oprah this week talking about money lesson's for kids. She made some great points and I thought I should share them.

This women Lori called in and asked if she should give her 10-year-old daughter an allowance of $20 a month. She said, "I read a recent article that said to give allowance not based on chores, but based on the fact that they're a part of your household," Lori says. "I was wondering from Suze, how much I should give her and what would be an appropriate amount for a 10-year-old?"

Suze thinks the article Lori read is wrong. "You get an allowance simply because you live in a household? No! Money has to be earned," she says.

Based on the federal minimum wage of $6.50 an hour, Suze calculates that each minute of work is worth roughly 10 cents. It will take about four hours of work to earn the $20 Lori's daughter wants. Suze says this is a good level to start a child's wages. "Now if they do that job efficiently, you can give them a pay raise. If they do not do that job efficiently, … I would actually decrease their salary, so that the kids understand good work equals good pay equals job promotion. Bad work equals getting fired," she says. "And when they learn that at 8, 9, 10, now what are we talking about? We have a kid that knows they have to work for something."


Here are 5 greats tips Suze gave to help you teach your children about money

1. Start talking about money. "Open up the conversation," Suze says. "As we said earlier, kids do as you do. Not as you say. So for you, you now have to open up the conversation with your actual actions."

2. Teach your kids to value money. It's hard for kids to grasp how much you're actually paying for items when you do so with a credit or debit card, Suze says. Kids need to see something more concrete. "Start paying for things in cash. That's what you really need to do," Suze says.

3. Don't reward your children with money. An A on the report card doesn't equal $50, Suze says. "Love them. Spend time with them," she says. "[They'll say:] 'I got an A. I get to go out with Mommy and Daddy. I get to spend time.' Teach your children the value of a personal relationship—not that everything comes down to money."

4. Be an example for your children. "Kids do as you do, not as you say. And don't think that they don't watch everything that you do," Suze says. "Don't tell them you can afford something when you can't. All kids want from you is honesty. All this world wants from you is honesty. And all you should want from yourself is honesty."

5. Teach your kids to prioritize. Sure, kids may want everything, but Suze advises to have them sit down and make a list of what they want the most. "If they still want it a month from then, let them come back to you, but prioritize. What is really important?" she says. "And Mom and Dad, help them prioritize—what do you need versus what you want? And out of all the things you want, what's the most important thing that you want?"