Money managements skills that every kids should know

Introduce the Concept of Money

Introduce young kids to coins first. Teach them the value of coins and encourage them to save their coins in a piggy bank. Use a clear piggy bank or jar so that kids can actually see their pile of money grow.

Lead by Example

Explain what you’re doing when you write and deposit a check, use an ATM card, or pay for groceries. Avoid actions such as making an impulse buy, and tell the kids you’re going to wait one day instead and see if you really want to make the purchase. Kids are very observant and will learn many of their money concepts by watching you and copying your behavior.

Open a Savings Account

Explain to kids how compound interest works and show them how their money grows in a savings account. Expand to a checking account once they’re ready.

Use an Allowance

More than 4 in 5 Americans believe kids should receive an allowance, most commonly saying every cent should be earned and linked to chores (52%). While a quarter (27%) believe it should be partially earned and partially gifted.2 Whatever you decide, when kids receive an allowance they must learn very basic budgeting and rationing skills. As they manage their allowance money, their money management skills will improve.

Make Learning Fun

Play money games that encourage learning. Board games, online games, and homemade games are all possibilities.

Allow Them to Make Mistakes

Let your kids make their own spending decisions, even if it means making mistakes and wasting their money. It’s a valuable teaching tool. However, be ready to step in and help guide them when they need it.

Let Them Earn Money

Working summer jobs, becoming lemonade-stand entrepreneurs, or working for mom and dad will all help kids learn about business and hard work. If you pay an allowance, call the money a commission instead, and allow kids to earn various commissions for different household chores.

Create a Budget Together

Allow your kids to plan for a family event to practice their budgeting skills. Help them also understand the opportunity cost of spending money on one thing, that may keep them from having enough money for other things.

Teach Your Teen About Credit

Help your teenager understand the concept of delayed gratification and the pros and cons of buying on credit. Kids will often be surprised by the withholding on their first paycheck. Explain the concept of taxes early on and their paycheck will meet their expectations.

One of the ways young adults get into trouble these days is with their finances. Schools are woefully inept at teaching personal financial planning, and most parents also don’t have a clue these days. If I had to bet, most people are living paycheck to paycheck today, so it’s harder to think long term. But, think long term you must if you want to focus on teaching teens about money.