Start Early- Teach Your Children How to Manage Money Before it’s Too Late

November 25, 2007 By Debbie Dragon

Kids will learn the basics of money in school- as early as kindergarten you’ll see them coming home with worksheets where they count up the pictures of pennies.  Unfortunately, they don’t learn much more than counting money and making change in school- and unless they choose finance for their careers, they’re not likely to learn much about money management unless the parents teach them.  Parents can help prepare their children for the fiscal challenges of life, starting as early as possible.

There are many benefits to teaching your kids about money.  Immediate benefits include the children being able to grasp the concept of why they can’t always have everything they want- so when they see the endless toy commercials on television or an ad for the latest electronic gadget, they  may not be as quick to beg for it.  Children who are taught about money often develop good saving habits that are carried into their adult lives- and many children are even able to understand things like “investments” and how to make good purchase decisions. 

Long term benefits of teaching children about money is that the education prepares them to avoid excessive debt.  As they’re learning how to save and make careful decisions regarding money- they’re developing an understanding about why debt is bad and how they can avoid it with financial security.

Allowances

Many parents choose to give their children allowances for helping out around the home with chores; while other parents give a weekly allowances whether the child helps out or not.  Whichever you decide is right for your family, it’s important that you teach your child how to handle the allowance he or she receives as it is a long term lesson in money management that can be adapted to paychecks when the child becomes a working adult.

Out of each allowance, you could have your child set a portion aside for long term savings, a portion aside for short term savings- for that toy he or she is dying to get, a portion for charity, and perhaps a small portion for immediate spending.  As long as the child is saving his or her money each and every time they get it, they are learning about the importance of responsible money management.  You may wish to provide “interest” on the long term savings, just like a bank would, or even open a bank account for the child.

Posted in children, family, parenting

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