How to Teach Young Children Money Sense

Teaching children to budget and be responsible with money.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Lined notebooks, pens, envelopes.

1. Children ultimately become adults, and on their journey believe that money originates in Mom's purse or Dad's pocket. They need to be made aware that money is earned and this is the road to future wealth. They must be taught to budget monthly. A good time is when they start "big" school, even though they will need help with the writing and adding. It takes commitment from a parent.
   
   - The first thing to do is to gather everyone around the dining room table once a month to participate in budgeting. Everyone must bring their budget book and some envelopes. Each child must make a list of expenses for the month and fill in the item and the amount, then total their expenses.
   
   -To control the "Gimme's" in stores, have a list in the kitchen with 2 columns - 1 for necessities and 1 wish list. At the end of the budget period items on the necessity list are purchased. Then a parent will designate a sum to be divided equally among each child for something from the wish list. If the sum is not enough, they can choose a less expensive item, or save it for next month to get what they want. They can also sign up for paid chores in addition to their regular chores, to earn the extra money.

2. -Their expenses list will include any birthday gifts for party invitations for that month. The parent will establish an age appropriate set sum for each gift, ie: $5. If there are 3 birthday gifts they must buy, they will be given $15 for the month. If they spend it elsewhere they go to the party empty-handed, or give something of their own. Birthday gifts must be checked off in their budget book.

3. -Payments for all activities such as dancing, art, sports, etc. will be given in checks - then each one placed in an envelope with the teacher's name and amount and a line for date and signature. These envelopes act as receipts and must be brought home, recorded as paid with date, in their budget books against the appropriate entry, and kept in a box, discarding at the end of each semester.
   
   -Pocket money can be negotiated and given weekly or monthly, and is a finite sum. If that sum proves insufficient, the child can ask for a meeting and justify their request, then renegotiate. Once the sum is agreed, they have to make it work. Every expenditure of pocket money should be recorded in 3 columns, showing date, amount and balance, in their budget book. At the budget meeting they must review their expenditures to see where they can cut back and save the difference. Other people should be encouraged to give the children monetary gifts rather than toys or clothes. They should be taken to the bank to deposit their savings and monetary gifts, so they can see how quickly it adds up.

4. -When the children show responsibility in managing their budget and saving something each month, the parent can then establish a quarterly cash award program given to the child with the most savings, to be paid into their savings account, to encourage continued willing participation. This bonus should also be recorded in their budget book.
   
   Believe me that this works. The proof is in the savings accounts and the children who grow up as financially secure adults.

[Chaos1187]

on 6/22/2009 Really good advice, I especially like the rewards idea. The budget book is a great visual aid to help learn and in addition they will learn simple math and see the uses for it via finances 5 stars

[musicdeb]

on 6/22/2009 Wonderful advice for teaching young children about money!
5*

[isiskat]

on 6/22/2009 This is so important to children. Thanks for the great article with great tips!