Teaching Your Children to Manage Their Money
A 2012 survey conducted by Harris Interactive for AICPA shows that many parents never discuss money with their children. It seems that kids are not being taught how to manage their money by their parents or anyone else. Parents who do talk about money don’t usually have that conversation until their children are at least 10 years old.
Web sites and posts abound about the best way to teach your child the skills he will need to manage his financial life. You can buy expensive programs or books that help you do the job. Or you can make financial education a part of your regular family life while your children are very young. Children will learn best by seeing how you manage your finances and will repeat your best or worst habits.
Start Early. Kids begin to want things very early in life, so when those first wants are expressed, it’s a good time to begin discussions about money. Children need to understand that not all wants can be satisfied. Help them learn to save their small allowance or gift money for the things they want. All kinds of lessons about budgeting, goal setting, delayed gratification, charitable giving, earning and saving begin here.
Keep it Simple. The lessons always need to be age appropriate and directed to the questions that are being asked. Talking about a pension plan to a 4-year old is not useful, but talking about spending and saving birthday money from grandparents puts the discussion in terms that are easily understood.
Make it Part of Your Lifestyle. The way to learn anything is to repeat the lesson until it becomes second nature. Make the lessons part of your conversation at dinner, grocery shopping, in the toy store, or any time the subject comes up. Their financial education will be enlarged upon as time goes by with more details. If you have these discussions over the years, your child should already know how to budget her money and avoid out of control credit card bills before she goes out on her own. She will have the skills she needs to set her own goals and successfully manage her finances.
You are the Role Model. You will be a much more powerful role model than all the financial education in the world. If your child sees that you are constantly overdrawn and bounce checks, you can expect your child to model that behavior too. If you frequently indulge your child’s whims, don’t be surprised if he is unable to control his own impulse buying. But if the financial conversations have been ongoing over the years, your son or daughter will be able to manage their own money and know what questions to ask when they need help.
Many excellent web sites offer free games, advice and age-appropriate topics for discussion with your child. Check out the ones listed below to see if they meet your needs. While you are teaching your child, you may also discover some new ideas to reach your own financial goals.
Thegreatpiggybankadventure.com Great games for younger kids to learn about money from the Disney people. Lots of tips for parents too.
pbskids.org/itsmylife/money Geared to slightly older kids with games and tips for parents.
www.schwabmoneywise.com. Parents will find this site most useful for ideas and activities for integrating financial teaching into everyday life.