Helping Children Gain Money Management Skills

Helping your children learn the skill of money management is going to impact them for the whole of their life. Money management is not a skill you are born with. Thus, you need to teach your kids about it. Here are some of the ways you can do this:

By example: This is the most effective way to teach kids about money management. If your child is watching you manage money well, they will learn to do so. However, if you buy now, pay later, and always keep yourself in a pool of debt, your child will likely adopt the same habits. What we do, and what our children see us doing is what they will likely imitate. What you tell your children as far as money goes is going to have far less impact then what you show them. So, if you want to teach kids appropriate uses and management of money, then do so by being a prime example of what to do!

You’re the best person for teaching your child about money.

Include them in making family financial decisions: Your family probably has a budget of some kind, and chances are you discuss your spending, big purchases, and savings on a semi-regular basis. It is time to include the kids in these financial meetings. They may not need to be there for all of the nitty gritty stuff, but it can help them to see you take your paychecks, and allocate the funds from them to pay for things like your home, your car, your debts, etc. Talk to them about how your family spends money. Don’t keep your income a secret from them, instead include them in it so that they can see money management in real life. This will help them learn money management in a way that is relevant to them. For example, you can have them help you pay the electric bill, and teach them that if they can be more conscious of their energy use, it can free up money for other, more fun things. Get them involved, and let them see how your family manages money.

Give them a chance to handle some money: In theory is always great, but kids learn better with some hands on experience. If you want to teach your child about money management, provide them with an opportunity to earn money, and spend it as they see fit. For example, you could create chore lists, etc. that give your kid a chance to earn some spending money. This money can be used however they see fit, without your input. This allows them to learn how to save for things they want, to stretch their money to make it last etc. It also helps them learn the value of money by attaching responsibility to it. This is different from an allowance they get for nothing. It means if thy do not do their part, they do not get paid. It is like the real world, and will encourage them to figure out ways to earn what they need for the things they want.

Start when they are young: Teaching kids about money management requires more than a sit down lesson on it when they are about to move out of the house and attempt life on their own. Teaching them about savings, debt, investments, and working for money should start when they are young, even if it is just familiarizing your child with money through board games and toys.