Money Management Strategies for Kids
Parents have the responsibility of teaching their kids about money management so they will be able to handle their own finances wisely when they leave home. Children can start learning about money when they are in preschool and continue developing more skills in managing money and being responsible for their choices as they get older.
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Teach Value of Money
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Teach kids how much things cost and help them compare the value of items. For example, tell a child in kindergarten that $1 buys either a candy bar, a soda at a restaurant, a pack of gum or a large apple. When the child is aware of how much things cost and what options he has at any given price level, he can make better decisions about how much to spend money.
Divvy Up Allowance
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Give children an allowance and set expectations about what sorts of things they will need to buy with their allowance money. For example, you could say that kids will need to use allowance money to buy any toys other than the ones they receive as gifts for holidays. Also set up expectations for what percentage of their allowance will go toward different types of spending. For example, 10 percent could be given to a charity or used to purchase a gift for someone, 30 percent could be spent as fun money on small toys or candy and 60 percent could be saved for larger purchases.
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Make Savings Plan
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Show kids how to forfeit short-term pleasures to save up toward long-term goals. For example, adults often save for a vacation or for a down payment on a home. A young child might want to save for a specific toy or a young teen might start saving for a car. After identifying goals, break them down into reasonable savings chunks. For example, if a toy costs $30, the child could plan to save $3 of allowance money for 10 weeks to buy the toy.
Play Games
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Help children learn through games and real-world application. Any board games that involve money, such as Monopoly, Payday and Life, teach children that they need to spend their money wisely. The games also teach the consequences of running out of money. For older kids, play a real-world game, such as giving the child $15 in a grocery store and having her use it to buy everything she needs to make dinner for the family. This teaches children how to purchase items within their budget to meet a specific goal.
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References
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