4 Tips to Teaching Kids How to Manage Money
I grew up in a pretty conservative household when it came to saving and spending money. Guess that’s why I started teaching my daughter, Mikaila, when she was young (& the other kids in my life) to be responsible with their money early on. By the way, she’s the baby and just turned 21 today! Happy Birthday kiddo!
I believe in giving children an allowance for two reasons. One, it instills in them a sense of pride completing a responsibility and receiving something tangible for their efforts. But secondarily (& most important I think), is to teach them how to manage money early on.
I gave the kids 4 "piggy banks" when they were about 4 years old and explained that some of their allowance needed to go into each one. I didn’t care the percentage in each as long as it was split up. The money was theirs to "manage". Also, the allowance was age appropriate beginning at 50 cents and going up through the high school years. If you have teens, you know how much it can go up! This also applied to any birthday and holiday money they received. Here’s what the 4 banks represented:
- Bank 1 - Savings — I explained the importance of paying yourself first. When the bank was full we took it together to the Big bank, and I would match their funds. Sort of like a 401K! (It’s how they each bought their own first car)
- Bank 2 - Spending — Everyone, including children have some sort of wish list item. You need to treat yourself sometimes, even though it might be a stretch to get. This teaches them the concept of saving for it and how long it takes to earn the money
- Bank 3 - Vacation — Vacations and family time have always been a priority for us, so we always budgeted for one. Kids sometimes think that this means a free for all with souvenirs and the like. We had an agreement that I would buy one "nice" reminder of the trip, but they had to buy the "trinket" type things. I tell you, I found out they asked much less and came home with much less when they needed to part with their own money! Very helpful in my single days to be sure!
- Bank 4 - Charity — This money would accumulate for the year, and at the holidays they chose who to donate the money to. Of course when they were young it might have only been a total of $8, but it was from them and from the heart. Sometimes a Women’s Shelter was the recipient, or Leukemia Society, or Animal Adoptions. They chose "their who" each year.
This started out as somewhat of a game, but stayed with them through the years. Of course, as they’ve gotten older they’ve needed to learn additional strategies such as investing. Now, I’m beginning to teach my grandkids how to manage their change. If others start at home with their little tykes, we might be able to make a difference, even if small.
Here’s a photo of Mikaila a couple of months ago with her niece and nephew who were visiting from Texas. Again…. Happy Birthday!
Leave a comment about how you teach the children in your life how to manage money 
Until next time, J.
"Take control of your destiny or someone else will"
Tags: 401k, 50 cents, additions, amp, bank 1, banks, budget, budgets, cars, charities, couples, destiny, earnings, family time, first car, game, grandkids, happy birthday, heart, household, how to manage money, investments, leukemia, longing, management, mikaila, money, money bank, percentages, photo, photos, piggy banks, pride, priority, reminder, s, savings, society, souvenirs, spending money, strategies, trinket, vacation vacations, Wealth Strategies, why, wish list
October 22 2008 02:03 pm | Misc Ranting and Vacations and Fun and Wealth Strategies
October 22nd, 2008 at 2:15 pm
Excellent! I never thought I’d hear myself saying this, but kids really do think that money grows on trees. You should see the shock on my son’s face when, as we tally up at the register a boatload (or not) of groceries what happens when they hit the “here’s what you owe us lady” button LOL! Since he’s coming of age soon, it’s a reality check. However, right from the beginning we’ve taught him the value of money (and his savings). He will stand there and weigh the pros and cons of “things on sale” versus their original prices, etc. Great post for all parents (and even some grown ups LOL!)
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