Is Your Child Money Smart? Tips Parents Can Use To Help Teach Money Management Skills
Good management skills are perhaps the most important skills for building a successful life. For example, children who learn good nutrition from their parents will be better able to manage a healthy diet as an adult and those who learn time management skills will be more apt to achieve educational and career goals.
While all types of management skills are important, children who learn how to efficiently manage money often have an advantage that can help them build a more financially secure future. Parents who want to teach their children good money management skills should start early in childhood and these proactive tips can help.
First, teach children to save
The first lesson to teach children of all ages is how to save money and why it is important to do so. A good way to begin this process, especially in young children, is to establish three separate containers for them to use to hold any money they receive for gifts or for doing tasks around the home.
These containers can be as simple as three lidded plastic jars or zippered pouches or as elaborate as purchased banks or cash storage containers. Parents should help their children label them as follows:
- savings—this container will be for the money that the child will retain for longer periods of time, such as when saving up to make a large purchase or before depositing the money into a bank savings account or college fund
- spend and enjoy—this container will hold the money that the child is free to spend on things they enjoy, such as treats, toys, or games
- donations—this container is for the money that the child will use for charitable giving or to donate to local causes or people in need
Each time a child receives money from any source, parents should sit down with them and discuss how the sum will be managed and then assist the child in choosing how much is to be placed in each container. Children who are taught to manage their money so that they routinely save some, enjoy some, and give some away quickly recognize that money is a valuable tool that can offer great rewards.
Next, teach children to earn
Children will need to have access to money on a regular basis in order to have any to place into their three money management containers. However, merely handing the child an allowance may not be the best solution.
Instead, parents who begin teaching their children the value of working to earn money can help to ensure that their children will lead more productive, successful lives as adults. For young children, a good way to do this is to institute a list of optional chores that are available for the child to do if they want to earn money.
These chores should be in addition to any mandatory chores that the child may be required to do. The list can be posted each week, along with the amount parents are willing to pay for the work. When the child completes a task, they can cross it off the list and place their initials beside it. Parents can then hold a weekly meeting in which the task list is reviewed and payments are made to each child who completed tasks successfully.
Parents can help their children take this money management education one step further by helping them start a free checking account. Under the watchful eye of their parents, these children can learn how to correctly manage and balance their bank accounts so that they can do so more successfully as adults.
To learn more about educating your children to manage money successfully, including the use of their first savings or checking account, speak with a customer service representative of a reputable bank or credit union in your area.
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