Tips for Teaching Children How to Handle Money
This year, non-profit credit counselors at American Debt Counseling began donating their time teaching at-risk children basic principles of financial management, and discovered children are eager to learn.
One in three adults responding to a recent survey said that they learned the most about personal finance from their parents or at home, making that the most popular answer.
With Father’s Day in mind, Debt Matters offers the following tips for helping teach young children about using money wisely, the value of saving and the importance of sharing.
Teach by Example: Take your child shopping with you and discuss why you go to a particular store. At the grocery store, explain the reason you choose one brand over another such as taking advantage of a coupon, a store brand value or a sale. Teach children how to read the shelf signs to determine which size of a product offers the best value.
A Message From Our Sponsor: Discuss commercials and ads with your children to determine what promises are being made about products and if those are realistic. For example, does the commercial imply that by buying a specific brand of athletic shoe you will score on the court like an NBA pro or be the most popular kid in school?
Making Allowances: Use allowance as a teaching tool encouraging children to understand how money can be allocated to spending, saving or sharing with others. For younger children, make allowance payments in coins and small bills so that it may be divided different ways. Set goals for savings and consider matching the money children set aside for savings or providing a cash bonus when milestones are reached.
Charity Begins at Home: Discuss why you feel it is important to give money to your house of worship, the community or certain causes. Ask your child to help stuff the envelope, accompany you on a fundraising walk or put money in the collection basket.
Bank on It: Plain, inexpensive piggy banks can be fun for children to decorate and display, and can help motivate children to save their pennies. As children get older, consider opening a small savings account to teach them about interest.
Learning Can Be Fun: The world has come a long way from Monopoly and there is now a variety of educational toys and games on the market. Free games are available also on the internet: Public Broadcasting Corporation offers a game about earning, saving and making smart spending choices while future international traders can learn the industry with a game from the International Money Fund.
Learning Financial Management is a Gift: Toys and books that reinforce financial management principals may ultimately mean more to a child than one more DVD. A tradition of marking occasions with a United States Savings Bond can also build a nest egg that may help a child pay for that first car.
Call for Backup: Make use of the free resources available to you. The FDIC offers “Money Smart for Young Adults,” a CD of financial education programs for youths between the ages of 12 and 20 that is available at no cost.
