How to Teach Your Child About Money Management

Financial repsonsiblity is important if you are 5 or 55 years old. Learning financial responsibility when you are young can help maintain proper money management later in life. Teaching your child to be manage money is not only a gift, but a responsibility of a parent. Helping a child to have financial management can help them to achieve something all parents want for their children, financial stability.

Difficulty: Easy

Instructions

1. 

   Teaching a child financial responsibility should begin early. This can be as simple as telling a 3 year old "no" when they want you to buy something. Or even saying, "We don't have money for that today". These statements are helpful for a child to hear as they are based on reality. It will also allow the opportunity to open a discussion about money. This may not happen at 3 years of age, however, it will allow a child to be more comfortable when he/she is developmentally ready.

2. 

   Next, teach children the actual value of money. Teach them the meaning of a penny, dime, quarter, dollar etc. Teach them how to count money. Although this is taught in school, it is vital to financial responsibility to grasp this concept early. There are many books or workbooks that are helpful.

3. 

   Next, teach a child the meaning of money by teaching them how to earn money. Discussions often happen early about why a parent must go to work or pay bills, etc. Discuss ways an adult earns money by discussing various jobs or careers. You can then discuss how they can earn money. Common jobs for children are chores, lemonade stands, paper routes, mowing lawns, and babysitting.

4. 

   After a parent has taught a child how to earn money, it is time to teach a child how to spend and save money. 1 way to teach spending and savings is to have 2 piggy banks. Mark 1 as spending and the other as savings. Have a standard plan of how much goes into each piggy bank. For example, if a child earns $5.00 per week by completing chores, maybe $3 goes into savings and $2 goes into spending bank.

5. 

   After there is enough money saved to open a savings account, take the child to the bank. Explain why people use banks. Next explain their new account by discussing their savings statement. This is very helpful for young children, as it is a hard concept that you have money being cared for by someone/something else. Banks are often initially frightening for children. Continual explanation is often helpful.

6. 

   As a child gets older, you can have them place their checks for birthdays or holidays in their respective piggy banks. As a child enters age to work, try to keep them on the same system. This helps promote having appropriated funds to spend and to save.

[cdorsey47]

on 10/2/2009 This is a must read for everyone! 5* and recommend.

[kittycooks]

on 8/25/2009 Learning how to earn and save money early on goes a long way to good money management as adults. Good article!

[cherry67]

on 8/25/2009 good idea!