Teaching Kids about Money Management

Kids are very observant, and they pick up on what their parents do and say, so be sure to set a good example when you’re dealing with money. Make it a point to teach kids about money management not only by what you say, but also by what you do.

 
Make a Budget; Stick to It: If you have to cut back on some things, let your kids know that it’s because those things don’t fit in your budget plan. Talk about money-related decisions that you have to make based on your budget.

Practice Good Spending Habits: Compare prices or use coupons before you make a significant purchase. Ask your kids to help you make the best decisions, talk about money management skills with them, and help them understand your spending practices.

Teach Kids About Spending, Saving, and Sharing: Kids may think they should keep all of their money for themselves, but showing that you care about helping others sets a powerful example. Decide on a percentage you will give each month to a nonprofit organization, school, or other charitable cause.

Don’t: Use your credit card to purchase things you can’t afford. This can be an especially appealing (and dangerous) money management practice for teens.

Do: Loan your child money. For example, if your child wants to buy a bicycle, have her save up a certain amount for a deposit and then figure out a payment plan (and stick to that plan every step of the way) until it is completely paid off.

Save For Now and Later: Encourage your kids to save for things like a new bike or a concert ticket—and in the long term, for expenses like college tuition or a car. Having a savings goal makes the budgeting process more real and tangible.

Practice What You Preach: Remember that your children learn from all members of your family, whether they’re talking about money or not. Make sure everyone is practicing good saving and spending habits to reinforce the messages you’re sending to your kids.

Like anything else, good money habits are best taught by intentionally setting a good example around your children. If your kids see you and other members of your family making well-informed, well thought-out, and responsible decisions about money throughout their childhood, they’ll be much more likely to make good decisions themselves. Make it a point to set a good example around your kids.

 

Comments

5

Also a great decision would be to open them a bank account with probably a 25 dollar deposit (or more) and tell them instead of wasting Christmas money on toys that will break quickly, put it back, and buy big toys when they get older.

Also it wouldn’t hurt if you can afford it to let 10 dollars a week go into their account, this will really help out when they want, or in these times need, a car.

I disagree with putting money into their account for nothing. Kids don’t actually NEED a car until they either have a job or out of college and, well, have a job.

There’s a lot more to teaching kids about money than these points, though they are great starters.

The most important aspect of teaching kids about money is giving them ample opportunity to practice with it. I suggest taking a large percentage of the money you spend ON your kids and running it THROUGH them instead. When they make a mistake, oh well. When they do great, praise them.

Also, there is a HUGE distinction between saving for later and Investing for later. Kids must learn the difference between saving and investing.

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