Teaching Children about Money Management
We’ve all heard of the three R’s of education: reading, writing and arithmetic. These are all valuable skills that every person needs to succeed in life. But there is one life skill missing from this set: financial literacy.
Establishing good money management habits and a solid understanding of financial concepts is important for Hoosiers of all ages. But it’s especially important for younger generations to understand how to manage money even at a young age, giving them a solid foundation for when they enter the “real world” later. Today’s youth are tomorrow’s spenders, savers and investors.
Parents, take an active role in educating your children about money. If you don’t talk to your children about it, who will?
Consider this: the latest version of the classic board game Monopoly trades in cash for debit cards, but does it explain to children what overdraft charges are or how to maintain a register of transactions? What about the Barbie doll that comes equipped with her own credit card and cash register? When she swipes too many times, her balance resets without requiring any payment. What message does that send children about the reality of using debit and credit cards?
Parents should be realistic about their finances so children know what to expect when they get older and have their own money to manage. When it comes time to pay your monthly bills, discuss with your children how much things cost and how you budget your income to pay those bills. Explain the differences in paying with a check versus a debit or credit card.
Make the lesson real by giving your children their own money to manage. For older children, encourage them to get a part-time job. For younger children, assign them chores or tasks and reward them with an allowance, then help them decide what to do with that allowance. Consider using a Money Savvy Pig to demonstrate how to budget your money between the four main uses: saving, spending, donating and investing. Unlike traditional piggy banks that have just one slot for money, this bank, created by Money Savvy Generation, allows children to distribute their allowance between the four uses based on their wants and needs.
Most importantly, set an example for your children and be a positive role model for good money management skills. Children often learn by watching and emulating their parents’ behavior. Take a good look at your own spending, saving and investing practices and make a point to maintain healthy habits in your own life.
- Celebrity Calamity (for Teens)