In today’s rapidly changing global economy, it is very vital and important that we take the time to teach our children how to manage their finances.
The average parent tends to place their focus on their children achieving things like higher education goals, good manners, sports, a career, etc., but rarely money management.
The ability to manage one’s finances is the key to financial stability and success in the future. Children are our future. By helping them we are helping them to make sound financial decisions.
Everything we teach our children at a young age will build a foundation for their future. Money is essential to our everyday life. It is the deciding factor for where we live, what we eat, what we wear, education, health and a host of other life necessities.
Remember sound money management is one of the most valuable life skills. Teaching our children how to manage money at an early age is best.
“Money is a tool that can have a very positive influence on somebody’s life, but if it’s not managed properly, it quickly becomes a burden. Teaching money skills to our children will promote habits that will serve them well for their entire lives.” (Cambridge Credit Counseling Corp).
Children need to learn the meaning of financial responsibility. They should know the difference between wants vs. needs. At an age-appropriate time, let them earn their own money. Set saving goals. Provide a place to save. Have them track spending. Offer savings incentives. Leave room for mistakes. Act as their Creditor. Talk about money. Set a good example. (Investopia).
Here are some tips you can use to help your children in learning to manage money according to Credit Counselling Society:
Examine your own attitudes about money.
Remember that children learn a lot about how to handle money by watching their parents. Be careful to set a good example and don’t be afraid to admit if you don’t know how to do it.
Give your children an allowance and let them make their own spending choices.
As soon as your child understands that people use money to buy things they want, give them a small weekly allowance. Encourage them to plan purchases in advance.
Expect your child to help with family chores. Give allowances strictly for learning how to manage money. Teach your child to save regularly.
Set up a process for saving money in a piggy bank or a bank account. Regularly monitor how much has been saved and talk to your child about goals for using their money.
Help your child discover the satisfaction of sharing. Encourage your child to identify ways they can spend money on helping others.
Involve your child in family financial planning. Let your child see you planning your budget, paying bills, shopping carefully, and planning major expenditures and vacations.
In this article by Madison Dupaix, 14 Ways To Teach Kids About Money, she highlighted a study done by the University of Cambridge showing that kids form their own money habits from as early as seven years old, “there observant eyeballs are usually watching when their parents make transactions…Children develop financial and economic understanding when they have ‘personal and economic experiences.’ For example, sources and amounts of money that children control, influence their learning”.
Start by helping kids observe and calculate the exchange of money from an early age and by asking for their opinion when you are getting ready to make a purchase – big or small.
Introduce your kids to coins first. Teach them the value of coins and encourage them to save their coins in a piggy bank. Use a clear piggy bank or jar so that kids can actually see their pile of money grow.
Introduce long term – planning. Teach your kids about long-term savings and debt. Discuss the cost of college, cars, houses and retirement to give them a head start.
Teach kids to set goals. Many successful financial milestones are achieved by goal-setting. Encourage your kids to set saving goals and work towards them.
Introduce taxes. Kids will often be surprised by the withholding of their first paycheck. Explain the concept of taxes early on and their paycheck will meet their expectations.
Create a budget together. Allow your kids to plan for a family event to practice their budgeting skills. Help them also understand the opportunity cost of spending money on one thing, that may keep them from having enough money for other things.
Make learning fun. Play money games that encourage learning. Board games, online games and homemade games are all possibilities.
Teach your teen about credit. Help your teenager understand the concept of delayed gratification and the pros and cons of buying on credit.
There is no greater satisfaction for parents than seeing your children becoming well rounded adults and achieving meaningful and realistic goals, (especially financial ones) many of us were not given these opportunities when we were growing up.
It’s not too late. In fact, it is never late so as adults we too can follow the guidelines offered online to help us develop our own money management skills. In so doing we will then be able to help children develop and master their money management skills. Even if they are not our own children.
Works Cited
Cambridge, Credit Counselling Corp. Children and Money Management. Simple Safe Financial Solutions. Home/Good Payer Financial Education.
Credit Counselling Society. Tips for Teaching Smart Money Management. Budgeting With Kids. https://nomoredebts.org/budgeting/budgeting-for-kids
Dupaix, Madison. 14 Ways to Teach Kids About Money. The Balance. Financial Planning. Family Finances. (2020). https://www.thebalance.com/teaching-kids-about-money-5205698
Lake, Rebecca, et al “Ten Tips for Teaching your Children to Save money. Start Their Financial Education Early.” Investopia. Family Finances. Finances with Children. Updated June 19, 2021.
