Teaching children to be good money managers is an ongoing task for parents. Opportunities for providing lessons about money management occur intermittently throughout childhood and teaching children money management skills can serve more than one purpose.
Opportunities for providing lessons about money management occur intermittently throughout childhood and teaching children money management skills can serve more than one purpose.
Not only might your children learn the value of a dollar and how to be financially responsible, but they could also adopt a positive work ethic, be instilled with a spirit of generosity, learn the virtue of patience, goal-setting techniques, and many other positive personality traits, simultaneously with learning to be good money managers.
If we teach our children these important types of lessons while they are still young, we will shape the kind of adults that they will become:
The 4 Components of GOOD Money Management
This article will discuss the 4 tips & components of good money management: Saving, sharing, spending and earning, and how each can be most effectively taught to children.
Learning to save a portion of their money is the first and foremost important lesson for children to learn.
Starting when they are small and potentially receiving monetary gifts for birthdays, Christmas and special milestone events, a parent can talk to the child about saving a part of their gift to use at a later time.
Before taking the child to the store to spend his gift money, suggest he put a percentage, 10 % is a good rule, into his piggy bank.
For school-age children who already have a good grasp of money concepts, you might help them to open a savings account at the bank. Have a conversation geared to the age of the child about the meaning behind the saying, “Saving for a rainy day.”
Talk about how saving a little will accumulate and allow the child to one day obtain a big-ticket item he has been desiring to own.
With older children, you might even introduce the subject of earning interest and how saving money can actually earn them more money.
Be a role model for generosity. Allow your child to witness when you are donating time, money or goods to charity. If you are a churchgoing family, let him see you putting a weekly contribution into the church basket on Sunday.
Talk about the virtue of helping others less fortunate, for while you want your child to appreciate what money can do for him, you do not want him to develop a greedy attitude.
Children learn from example. When you are shopping and there is a box requesting donations for a worthy cause on the check out counter, let your child insert some of his own pennies in addition to the coins in change from your purchases.
If your child sees you practicing charity, he is sure to emulate your positive behavior later on in his own life.
Teach your child the difference between “needs” and “wants.” Have discussions about using earned money to cover needs before indulging in luxuries.
Practice good money management in your own life and your child is apt to follow suit. Incorporate the entire family into planning and saving for annual vacations, for the lessons inherent in that one endeavor will be immeasurable.
Your child will be exposed to goal-setting, budgeting, prioritizing; all behaviors surrounding money management that will benefit him his entire life.
Don’t be afraid to allow your child to eavesdrop on budget conversations between you and your spouse.
That is the way he will learn that money must be spent wisely, doled out carefully and sometimes acquiring “wanted” items must be postponed in lieu of more pressing “needs.“
Learning not to succumb to a desire for immediate gratification is a key lesson in effective money management.
Teaching the concept that one must work for what he wants can be accomplished by establishing an age-appropriate allowance for your child to spend as he wishes. You can even swap Electronic or Screen Time Minutes for Chores if you don’t want to give a monetary allowance.
You might designate certain routine chores to be connected to the earning of the allowance.
Begin with simple expectations, such as making his own bed and keeping his toys picked up. As the child grows, the chores can become more complicated to align with his increasing skills and abilities.
In addition to his allowance, provide the child opportunities to earn extra money by doing jobs above and beyond the ordinary.
Not only will he be able to earn his own money for desired large ticket items, but he will also learn that hard work is rewarded, which translates into developing a good work ethic to benefit his future career.
Teaching these money management skills will have positive results when your child is grown, with a career that hopefully affords him financial freedom, and yet he continues to exhibit the responsible and wise spending habits learned in his youth.