Helping Children Learn the Value of Money and Money Management


Helping children learn the value of money and money management is a priceless lesson. Even your toddler observes how to handle money – and you are their first financial advisor. I recall a time when I was with my young child at the store and he asked for a toy. I told him I didn’t have any cash on me and to my surprise he asked me to “Use my card.” From this simple exchange and the conversation that followed, I realized that he had no concept of how this magic card worked. He didn’t put it together that I worked, earned money, put the money in the bank and then used the handy piece of plastic to which he was referring to access the funds.

Having a chores or allowance system provides a practical way for children to earn money. After the daily routine tasks that we all must to maintain our day to day life – making the bed or putting our clothes in the hamper for example, providing age appropriate additional tasks for children to do for money will provide an opportunity to introduce your children to the world of personal finances.

Once you establish a method of earning, you can teach your kids financial responsibility. The 4S system is a great way to teach young kids how to budget. To use this system, you divide their earnings into 4 categories: Spend now, Spend later, Save and Send. The “spend now” money is for things that they need to have – lunch money, snacks and other daily needs. The “spend later” money is for something she wants, the “save” money is to be set aside for emergencies, college or other later in life events and the “send” money is to be given to charity.

Some parents want to teach their children the importance of money management and budgeting, but don’t want to be bogged down by a chores system. These parents often choose an allowance method, where they give each child a set dollar amount each week that is or is not tied to the completion of tasks.
Whatever method you choose to use to teach your children the lessons of responsibly, hard work, and money management we can all agree that in these vital lessons are life skills that will help your child to lead a life of financial integrity.



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