Managing money: It starts with a piggy bank
When is the best time to teach your kids about money?
Most children receive a piggy bank in the first few years of their lives and a big deal is made when coins are deposited and the pig starts to “put on some pounds.” Children learn very young the power money represents and that’s when we need to plant money management seeds. When the piggy bank arrives, the lessons need to begin. With birthday and holiday money or savings bonds, selling toys at a garage sale, allowances to part-time jobs, kids can accumulate money and as they grow so should their knowledge and skills related to money management. Starting when children are young will ensure that mistakes will be less costly at age 5 than age 25.
Lesson one: Be a role-model for the techniques you expect your children to learn
Let them know you have to save for a family vacation or that you pay yourself first out of each paycheck for retirement savings. Share with them how much things cost. Let them hear you use the words budget, savings, investment and money management.
Lesson two: Schedule regular talks with your children
Base what you discuss with them on their age; the older they get, the more information you share. Be aware of teachable moments such as planning ahead for shopping trips. Let your children know how much they are allowed to spend before you leave the house. Show them how to check ads in the newspaper.
Lesson three: Teach your children the difference between a need and a want
Managing money takes self-discipline. This can be a difficult concept; everything we want as children can be a need! Slowly children will learn the difference, and it will become an automatic part of decision making in the future.
Lesson four: Teach your children how to use a credit card
The media message for credit cards is spend, spend, spend. What isn’t communicated is the reality of paying the card off, not to mention the amount of interest that may be involved. Buying a flat-screen TV at $29.00 dollars a month may not seem like much, until you figure in the interest until it’s paid off and you’ve added almost $100.00 to the purchase price. This goes for loans as well; teach children to wisely choose when they decide to borrow.
Teaching children how to manage their money is time well spent; these skills will give your children a more secure future because they will know how to plan and spend. The Institute of Consumer Financial Education has many resources for parents, grandparents and caregivers wanting more information on teaching money management skills to their children.