Kids and Money
Updated: January 7, 2009
Money gives all of us, kids both young and old, decision-making opportunities. Encouraging and empowering children to become savers, and wise spenders, will enable them to do what we all want to do; keep more of the money they earn and do more with the money they spend. Here to discuss some simple ways to educate children on personal finances and managing money is Busey Banks Susan Abbott:
Q1: What is a good way to start teaching children how to manage money?
·Give them allowances. Kids cant learn to manage money if they dont have any.
·No set rule on how much, but should be enough so they can practice budgeting.
·Some suggest paying kids the same amount as their age, or $5 for a 5-year-old.
·The key is to pay them in denominations that encourage saving. If their allowance is $5, give it to them in $1 bills, and encourage them that at least one dollar be set aside for savings.
Q2: What about talking with kids about family finances?
·Its very important to communicate with children your values about money, age appropriately of course. Include your thoughts and ideas on how to save it, how to spend it and how to make it grow.
·Help them differentiate between their wants and needs.
· Have goal-setting sessions. Young or old, people rarely reach goals they havent set. Almost any toy or item like a new pair of sneakers children want to buy can become a quick goal setting session. This helps kids learn to be responsible for themselves.
Q3: How can we teach them about saving versus spending?
·Even children in elementary school can learn the concept of earning interest on savings.
·Some parents pay interest on the money kids save at home; youngsters can help calculate interest and learn the power of compounding.
·As they grow older, they can understand the importance of a good credit rating, and will soon realize one of the quickest ways to a good rating is having a history of regular savings.
Q4: Theres a lot more to kids and money. What should we remember?
·Children learn what they live, and kids do what they see. Set a good example. Dont chastise or punish for poor money decisions, but also dont make it too easy on them. Encouraging them to learn from smaller lessons like a toy that isnt played with are a lot less severe than learning you still have to make the car payment even when the car won`t run!
