Published On: Fri, Mar 2nd, 2018

Lessons in Money Management for Young Children

Kids need to learn about money from a very early age. The more ingrained money lessons are for kids, the better they will understand and practice spending, saving, and budgeting when they are older and it really counts.

money management

Playing Money Games

A great way to teach kids about money is through play. Sort a pile of quarters, dimes, nickels, and pennies and talk about which is worth the most and the least. Tape coins to identical pieces of cardstock and play memory games, encouraging the child to verbally identify each coin as he or she searches for its match.

Playing store, with a cash register and play money, is a classic way to teach about money. Gather up merchandise and put price tags on everything. Addition and subtraction might be too advanced for young children, but tallying the bill and giving change lays a good foundation for understanding money management later on.

Every Child Should Have a Piggy Bank

Every child over the age of two or three should have a place to keep his or her money. Even kids as young as 2 or 3 usually get a few dollars for their birthdays, and they should be able to keep their own money.

Give Children an Allowance

By the time kids are 6 to 8 years old, they have developed enough awareness to understand the concept of trading money for goods and the idea of different things costing different amounts. They don’t need much to start with; most parents find that a weekly allowance of 50 cents to a dollar per every year of age is about right. If kids are to learn about budgeting, saving, and spending money wisely, they need to practice those skills. They will learn from the things they do right as well as the mistakes they make.

Teaching Opportunities at the Store

Never use the line “we don’t have the money” to explain why you don’t buy something at the store. Instead, explain the real reason for forgoing the purchase: because it’s not a good value, or because you would rather save your money for something else.

Make children aware of the prices of items they want at the store. Compare prices to help them understand the concept of value. For instance, a parent could say, “That tiny plastic figurine is not a very good deal because it is $3. That’s almost as much as that fun $4 sticker book you saw at the other store yesterday.”

Discuss Spending and Saving with Kids

When kids beg for a toy at the store, encourage them to save up to buy it if they really want it. They should later return to the store with their own money to physically handle buying the item; the lesson will be lost it if the parent handles the transaction and the child simply pays her back after getting home.

After kids get their first taste of purchasing power, they will immediately want to buy the next toy they see. But it’s important for parents to point out that they will need to save up for another purchase, and not to give in no matter how much their child begs for extra money. It’s very important for children to grasp the concept that money is finite and that they need to learn to prioritize their wants.

Model Good Money Management

Parents can ask children’s help in comparing prices at the store and think out loud when they’re debating a purchase. They should also talk about things they are currently saving for, such as a house or a new washing machine, so that kids can see that their parents have to follow the same rules of money management as they do.

Through playing money games together and giving kids a chance to practice saving and spending with an allowance of their own, parents are teaching valuable lessons about money that will hopefully stick with a child for life.

About the Author

- Paul Linus is an eminent online journalist who has been writing news, features and editorials on different websites from across the world for about a decade.

Composite Start -->
Loading...