Teaching Children Money Management
Instructing Kids About Effective Ways to Handle Finances
Parents often fall short when it comes to teaching kids how to handle money. Learn effective ways to instruct children about financial management.
Teaching children money management isn’t typically at the top of parents’ “to do” list. But in a society where kids are constantly enticed by marketers to spend--it’s important to teach them to be financially savvy. Instructing kids about effective ways to handle finances gives them the tools they need to secure their economic futures through discipline, planning, and saving.
Educating children about money lessens the likelihood that they’ll face a future filled with financial debt. The following are some things that parents can do to teach children to manage finances wisely.
Give Your Children an Allowance
The purpose of an allowance is not to reward children for things that they do everyday like making their beds or picking up their playthings, but to be used as a means to give them hands-on experience with money management.
Moms and dads shouldn’t just hand children money and leave them to their own devices. An allowance should be given in conjunction with guidance on how to budget and save. Even when children receive monetary gifts from friends and family members, parents should require them to put aside no less than 10 percent.
Let Children Deposit Money into their Savings
Children can acquire money management and banking skills when parents allow them to become actively involved in helping with deposit slips and teller interactions. So once a month, kids should be allowed to accompany parents to the bank to make deposits into their savings accounts.
Teach Kids to Save for Things they Want
Instead of giving in to the temptation to “spoil” your children, take advantage of the opportunity to teach them ways to manage their money. Kids can learn valuable lessons in budgeting and planning when parents encourage them to save portions of their money for some of the nonessential items they want.
Model Good Money Management Skills
When kids witness parents spending frivolously on things they can’t afford, it sends the wrong message. Children will learn to be financially irresponsible and doomed to a life of debt. The best thing parents can do to teach children financial responsibility is model the importance of money management by saving, using credit sensibly, and living within their means.
Teaching children money management is not about policing every little thing they spend--it’s about guiding them to make smart financial choices that stay with them for life.
References:
Family Education. Teaching Your Child about Money Management. Good spending habits; saving for the future. Accessed 5/09/08
Forbes.com. Teaching Kids About Money. Accessed 5/10/08
