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Teach Your Child How to Manage Money

If there is one important lesson that parents can teach their children about money, it will be how to manage it wisely. And of all the things children learn from parents through their parents being a good role model, this is not one. Children generally don’t see how the household money is spent; saved or earned therefore they have no concept of money management. Yet there are ways you can provide money management teaching opportunities by doing basic activities, these will be provided below.

If there is one thing children know about money it’s that mommy and daddy have it and it can get them what they want, “Mommy can I have that, daddy can you buy me this? ENonetheless, just as soon as your child understands the concept of money provide them with a piggy bank and the guidance to place that money in the bank. Keeping a piggy bank and consistently saving loose change from a young age will provide your children with the concept of saving money early, but this is only the start of teaching them money management.

You can begin to teach money management strategies with your preschooler by having a weekly activity you can both be apart of, clipping coupons from the Sunday paper or online. You can both clip and save the coupons for common uses in your household.

Once you have a number of coupons and you are ready to use those on your shopping trip take your child along with you, a small calculator will also help you on your venture. But don’t just grab the item from the shelf because you have a coupon, you should also budget shop. Compare the prices from the other brand names as well, “this ketchup is $2.00, while the ketchup we have a coupon for is $4.00 with $.50 off, so even without the coupon the two dollar ketchup is a better deal.”

Don’t forget to tell your child, “Look at that! We got the best deals ever, we did very well. EBudget shopping is a very good principle to money management and is a great start for your child in learning this lesson. At the end of the shopping adventure show your child how much money you saved from using the coupons, then you can either put the extra money in their piggy bank or stop and get a treat, “With the money we saved we can stop and get an ice cream cone or go to a movie. EThis reward will teach your child that you can get more for your money when budgeting.
Main points to address:

  • Clip coupons from your local newspaper or online (www.coupons.com, www.couponchief.com, www.wow-coupons.com)
  • Budget shop with your child, even though you have a coupon does not mean that it is the greatest deal.
  • Be enthusiastic when you make a great purchase.
  • Show them how much money you saved with the coupons.
  • Either place the money you saved from the coupons in their piggy-bank or stop and share a treat together.

Grades K-6th
Once your child gets into the elementary school level, give them a weekly allowance for services they have done through the week, doing chores or helping with the yard. Be sure to break the bills up into small bills and change.

Provide your children with a financial journal; this can be done together on a weekly basis. Sit down with your child and have them write on one side of the paper the amount they received in allowance and expenses on the other side of the paper. Then have them write down all of their expenses that they have during the week along with the amounts next to each expense (see example below).

Allowance Expenses
$10.00 Savings: $4.00
School: $2.00
Entertainment: $3.00
Christmas savings: $1.00

Give your child an envelope or some type of savings box with the expenses written on the outside of the box, then separate and place the money into each compartment for all the expenses they have. Continue this on a weekly basis.

Allow them only to spend so much per week, whether that is from their entertainment money or not. Keeping a budget and sticking to the budget will be very helpful to your child’s financial future, but that doesn’t mean that when they want something that you should buy it for them. Allow them to purchase the items they want with their entertainment money and if they don’t have enough money to buy what they want this will be a very good lesson to them in saving. However, when they do save enough money to purchase an item allow them to do so, this will teach them the benefits that are associated with saving.

Main points to address:

  • Use the preschool tip to teach your child about budgeting.
  • Provide them with a weekly allowance and a financial budgeting book.
  • Have them keep up with the financial budgeting journal weekly, writing down everything spent and saved.
  • Provide them with envelopes or small boxes, clearly labeled, for each expense they have.
  • Keep them on a strict budget, without giving in with toys or extra money.

Resources that can help you in your venture include:

Posted in Education.

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