Teaching children to manage money

money management is an important skill that is sadly forgotten in the school curriculum. Teaching children to manage money is an important life lesson that can make a difference to their future finances.

•The lack of money management teaching in schools

As children become older, the importance of learning how to handle money becomes more relevant. Many children are taught how to open bank accounts and the importance of saving at an early age. Unfortunately, this is usually the full extent of money management education for young children and teenagers. In an ideal world, children would be taught the pros and cons of credit cards, loans, overdrafts and pensions from an early age. As it stands, many children now leave school with little or no money management skills as they enter their adult world.

•Parents and teaching money management

It seems that the onus of teaching money skills is now on the parents. Teaching children how to manage money shouldn’t be difficult especially when children are in their teens and start looking for ways to earn some extra money. Children do become interested in money at an early age, usually when they begin to receive pocket money. There are a number of easy ways that parents can make teaching of money management skills a weekly routine.

•Easy ways to teach children about money

It’s not hard to find ways to begin teaching children about the value of money. Saving is the first skill that can be taught from an early age using tools such as piggy banks. Piggy banks can be used to illustrate the benefits of saving, and this can then be transferred to the next step of opening a bank account. Children can be taught to save over the long term with goals such as saving for holiday money or Christmas presents. Allowing a child to be included in family budget talks will help them to achieve a sense of the value of money, where it comes from and how it is spent.

Easy to implement money management skills for children

There are a number of tried and tested ways to teach children about the importance of money management. Popular methods include:

•Teach children the value of money as soon as they have learnt to count

•Take children on weekly shopping trips to learn about spending and the price of goods

•Show examples of how interest rates work on credit cards

Allow children to make their own choices on spending decisions and to learn lessons from bad choices

Show children the difference between needing and simply desiring goods and products versus money available

•Open savings accounts and use an allowance to instil the importance of saving

Older children should be taught the consequences of credit and debt and how it can impact their future finances

•Allow children to earn extra money from an early age instead of just giving it to them

•Long term saving versus debt and borrowing

Children should be educated on the importance of saving over the long term and the benefits of doing so. This skill can be taught by explaining how having emergency saving funds work, and how to budget and save from monthly income. Children should also be taught the pros and cons of saving versus borrowing, and the downsides of getting into serious debt. By teaching children this valuable skill they may actually be able to avoid the credit cards and loans route.

Parents should take responsibility for teaching their children the importance of money management. There are many books available on the subject but practical learning is vital. Children can learn these skills as soon as they begin to receive an allowance. Once these skills have been instilled it should become an ongoing process that will become second nature as the child grows towards adulthood.

Source: goingdebtfree.co.uk