Teaching Your Children Money Management

By: Mary Joyce
Submitted: 2007-01-17 16:21:53
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Money & Kids

Children have vast amounts of purchasing power (billions) either directly or indirectly. Yet, even with all this influence and direct purchasing power, children are rarely taught about money… and more importantly the managing of money. I for one used to be as guilty as the next parent when it came to making it a point to teach my kids about money and money management skills.

Of course, the generation gap combined with the technology age in which kids now live in had a big part in my lack of focus on this subject. But no more. If for no other reason, you should think for a moment how money is so rapidly transferred today; with just the swipe of a card. And in fact, many people (parents) today hardly ever come in contact with actual paper money anymore.

It’s so easy to load up your shopping basket with just the swipe of card… and there in lies the trouble for kids and managing their money today. It’s just too easy and there’s no immediate pain of actually taking those hard earned dollars out of your little purse or wallet and parting company with your money at the time of the purchase.

First of all, don’t put off teaching your kids about money, the value of it, and how to manage it. It’s never too early… especially today.

When you first begin to acquaint your children with money, be prepared for mistakes and some growing pains understanding conceptually. It is far better to allow your children to learn from mistakes involving small amounts rather than later in life when the same mistakes can prove financially disastrous. In fact, many financial experts agree that a big mistake is for parents not to allow their children to have control over their money early on.

As with teaching children about any subject matter there general guidelines about the level of complexity that is introduced at any particular age; teaching your kids about money management is certainly no exception. So, let’s take a look at some general teaching guidelines pertaining to money management and at what age level.

Even early on with toddlers and preschoolers you can give your child an allowance. Now keep in mind that they will probably play with it, misplace it, and maybe even lose it, but that’s perfectly fine. At this age, it is merely introducing the concept that their little bit of money has value and should be kept safe so it will be around when they want to use it.

With the ease and power given to today’s consumer, it is difficult to get adults to understand and have the discipline to save for something they want or need to purchase. But even at an age as early as about first grade you should begin to take on this challenge with your child. So much of today is instant gratification. And no philosophy will be tougher for you to overcome with your children and money management as this. Delayed gratification or saving for something they want is a very difficult concept to teach kids and for kids to master, but it is one of the most important when it comes to managing their money.

Be sure to continue on with working with your children and the delayed gratification concept. In other words, teach them the principle of working and saving for something that they want to get. You’ll find (and they will too) that as they learn this lesson, whatever it is they worked, waited, and saved for will have much greater value to them personally.

The next level you’ll want to discuss with and teach you kids are the difference between needs and wants. This is ever so important today in this media, marketing, and consumption society in which we live and our kids are hammered with daily. You won’t have to look far for examples of needs versus wants… just turn on the television and wait for and advertisement.

Talk with your kids and discuss what it is the advertisement is going after them for and why. This is a very big money management accomplishment for kids when they begin to honestly differentiate between needs and wants.

It’s also at this point (early to mid grade school) that your kids begin establish some sort of savings plan for something they would like to have (notice I didn’t use ‘want’). The whole process of budgeting and saving for something at this age will give your kids a great sense of accomplishment, pride, and a first start toward financial confidence. Also, at this age with your kids introduced to saving and budgeting, it is a good time to introduce them to paying for some of the extras that they would like to have for school, sports, band, etc… and for beginning charitable contribution.

From here continue increasing your kids understanding of budgeting and managing their money by weaning them off of you providing the lion’s share of their ‘wants’ to them working, budgeting, and saving. Simply increase their financial responsibility to themselves, keep increasing their social responsibility too by giving to charities of yours and their choice.

As your kids progress to their teen years and become more mature, the time will come that you may want to consider getting your child some form of credit card. By this time in their life they’ll be considering college or some career path that will quite possibly require some sort of financial loan; and at the very least they will be needing even more financial freedom.

A prepaid, parent monitored credit card is an initial good solution. By now and through these many years of your tutelage, your child has become financially literate and it’s all because you started early on teaching your child solid money management skills and philosophies.

Kids today are bombarded with advertising, and keep up peer pressure; and this is why money management and financial skills are must subject matter for parents to continually cover with their kids throughout their childhood and teen years. If your kids become financially responsible at an early age, chances are much greater they will continue throughout their lifetime.

Mary Joyce is a former educator, successful homeschool parent, and has written many articles on Homeschool Curriculum for the Homeschool-Curriculum-4u website. Please visit (http://www.homeschool-curriculum-4u.com) for more of Mary's articles, resources on homeschool, ideas, and curriculum information.

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