Finance Quick Answers
What are some basic tips that I could use to teach my kids good money management?
Children will be curious about how much money you make.
Instead of discussing specific dollar amounts, use the
opportunities when they are thinking about money to
discuss how people earn income and to talk about some
good behaviors like saving and having a financial plan.
If possible, provide an allowance for your child.
(See
Children and Allowances for more information.) With
some direction from you, an allowance can be one of the
greatest financial teaching tools for your children.
They will learn to plan and take responsibility for
their purchasing decisions.
Sit down with your child and help them decide how
they will spend their allowance or any other money they
may have. Teach them to set aside a certain amount for
savings. Also, provide a little notebook where they can
note everything they buy to learn to track their
spending. Talk with them about their goals and for what
they would like to use their money.
It is difficult for children to understand how checks
and credit cards work. They see you pull out your
plastic card, sign your name and then take your
purchases home. Many children do not understand that
later a bill comes to you. Explain the process of credit
and how it works. Perhaps one child could loan money to
another sibling (charging a small amount of interest) in
order to better learn about how credit works.
Finally, practice good money management yourself.
Your child's best teacher is your behavior. It doesn't
matter what you say if you do something else. Display
good financial behavior and your children will copy it.
For additional information, see
www.wisepockets.com a website developed by the
Center for
Entrepreneurship and Economic Education at the
University of Missouri-St. Louis.
Mary Anne B. Pettit, Center for Economic Education, Southern Illinois University-Edwardsville
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Last update: Friday, July 25, 2008
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