Teaching kids money management skills in 3 easy steps

You make a wise choice in deciding to teach children money management skills. Money management skills are vital in our modern society. The way your children use and manage money as they grow up will directly influence how they will live in the future. Many adults today dealing with debt problems from huge credit card balances and the like have not been taught how to manage personal finances properly. If your parents knew that teaching kids money management skills in a fun and positive way will help them foster a healthy relationship with money, they wouldn’t have been in that situation.

While many schools have a financial education curriculum these days, getting your kids to learn basic money skills is never too early. Financial education is too important to be left solely in the hands of the school. As a parent, you can take these 3 easy steps to teach your kids how to manage money and give them a head start.

Step 1. Talk openly about money issues with your children.

Talking openly about money at home is an effective way to teach children about money. Young children often know more about money than we think. They learn from an early age that McDonald’s hamburgers or Toys-R-Us video games require money to buy. On the other hand, they do not fully understand the way the entire financial system works. If you don’t talk about money issues with your kids, you’re missing out on proper money lessons on earning, saving, spending, and investing.

Step 2. Involve your children in family finances.

The money discussion can only impress your kids with theories and concepts. They need real life examples to better understand some money management skills. Once your children are comfortable discussing money matters with you, you can involve them in the daily activities of managing your family’s finances. Involving children Give them the opportunity to watch you take control of your money.

Take them to the bank together to deposit their paychecks into savings accounts. Let them help you write checks to see how you allocate funds to cover household bills. Have them do the math by balancing a checkbook. Ask them to be involved in financial planning and household budgeting etc.

Step 3. Let your children manage their own budgets.

Your kids can learn a lot from watching you do the work, but nothing beats first-hand, real-life experience teaching kids money management skills. When you feel they are ready, let the children manage their own budgets. They will become money experts by learning faster from their own mistakes.

What you want to do here is set aside money for your children as a weekly allowance, and then give them the freedom to spend it however they see fit. However, you should make it clear to them that from now on they are responsible for providing for some of their own needs, such as clothing. So every time they want a new pair of pants or socks, they have to pay for it out of their allowance. When the kids are in their teens, you might also consider asking them to earn their pocket money by taking care of chores or taking summer jobs.