Tips for Teaching Kids Sound Money Management Skills
In an unstable economy with looming personal and public deficits, money management has become a family affair—especially once the school year starts and extra costs come rolling in each week.
Jan Brakefield, assistant professor of Consumer Sciences at The University of Alabama, is a certified financial planner and creator of Camp Cash, a two-week summer program that teaches fiscal responsibility to middle-school students. She shares tips for every parent looking to save money and raise children who know how to spend, or not to spend.
- Pay yourself first is the number one rule. Save 10-20 percent of all money from all sources – gifts, allowance, weekend babysitting, grass cutting, dog-walking, etc.
- Help kids avoid the perils of impulse spending and “me” spending. Assign them partial responsibility for creating the weekly grocery list. Give them a budget. Use the weekly grocery ads as a resource. At the grocery store, do not exceed the budget.
- Teach the concept of buyer’s remorse. Ask the youth to explain why he does not use many of the items in his room that he desperately wanted (needed!) two months ago. How have his feelings about the items changed?
- Before making any major household purchase, ask the child to make a list of pros and cons. What will we have to give up in order to buy this “thing”? How will buying it make our life better? Sleep on every major purchase … leave the store and discuss the purchase with the entire family overnight.
- Have open, honest, often communication. Hold a family meeting to decide on vacations, Christmas expenditures, etc. Come to an agreement. Live with the agreement. Set goals and discuss the steps necessary to achieve them. Get an agreement from everyone to stick to the plan.
- Share your best money habit with your children. Explain in detail why it is a worthy behavior.
- Teach kids the advantages of delaying gratification. Give them money. If they still have all of the money in two weeks, double it.
- Take your child to open a savings account. Explain all of the features and benefits and quiz him in two days. Does he still remember the rate of interest? How often it will be paid? How deposits and withdrawals are made? Reward good knowledge retention with a deposit into the account.
- Model responsible spending to your kids. They will follow your example. Make sure it is a good one.