Teaching Money Handling to Kids
From a very early age teaching money should be part of the education your child learns at home. While we often focus on other important things many children’s extent of money education is balancing a checkbook if that much! Of course age appropriate lessons are important.
Teaching money can be as simple initially as the concept of saving coins for a treat from the store. As the child gets older saving can take on a bigger importance. Sometimes a savings account, with half of the child’s allowance going into the account, is a way for an older child to learn about interest that is paid on their savings. This also is a means for teaching money handling as the child has half of his allowance to budget, with the other half they don’t miss as much initially because they “don’t see” it. In time taking the child in to make the deposits allows the child to see the money isn’t taken away.
One way that some parents impress the value of money is although they cover the basic costs if a child wants extra he or she must cover the excess cost. For example, basic clothing costs are part of raising a child. A shirt, jeans and shoes can have basic, no frills costs which the parent pays. However, if the child wants a name brand item, he must pay for the difference between that basic item and the brand name item with his own money. This simple technique can make a child more aware of need rather than want. We need clothing to appear in society but brand names don’t cover any better than no-name. The difference of a few pennies or a few dollars may give a different view on the value of items they may not otherwise think about. Extra things such as video or computer games are items that children can get for special gifts (birthdays, Christmas for example) or buy with their own money. Occasional small items may be special gifts as rewards for watching their spending and saving.
Some parents may confuse children in not defining what is a need over what is a want. Needs are life sustaining – food, shelter, clothing and other basics. Wants are extras that are usually for enjoyment. Although this lesson may not be directly about money it is important in connecting to the value of money. Another important lesson is that of cost and value. This also can be done in small ways initially. Although some see these lessons as unnecessary restriction it is actually empowering children to make wise decisions. They need not make the mistakes that many adults make! It’s also far less painful if done almost naturally in a matter of fact way. Teaching money need not be a difficult task but consistency is important. With a good grasp of the value of money the child grows into a young adult that is much more prepared for a lifetime of good money habits. Financial responsibility is a lifetime gift.