“April hath put a spirit of youth in everything,” said William Shakespeare. Little did he know that this would also apply to financial literacy. In 2003, Congress unanimously passed a resolution naming April as Financial Literacy for Youth Month. Just as caring for a young plant in spring is critical to the development of that plant, teaching our children money management skills is essential in raising financially literate adults.
Teaching money management skills to children can seem a bit overwhelming at times. Yet, with careful planning and a good attitude, it can be an enjoyable experience for both parents and youth. It is not only a great time to commit to teach our children, it’s also a great time to recommit as adults to a financially fit future.
Most commitments require a process to complete. Teaching our kids to be good money managers is no different. To help in this process, Kidbudget has come up with five golden rules for parents as they teach their children money management skills. Below are the five golden rules:
Golden Rule #1: Make it Fun! Use games, activities, and even jokes to teach your kids about money. Go online and you will find dozens of activities and money games on the subject. Even toddlers enjoy tossing coins and counting change. There are videos on the internet that show the process of coin making and printing currency. Use play money and set up a store where your child can purchase small items. It is true that kids learn faster when they are having fun.
Golden Rule #2: Look for Teaching Opportunities. Are you going to the store? Talk to your kids about money. Paying your bills? Talk to your kids about what you are doing. Are you getting money from the ATM? Explain how the ATM works and why you keep your money in the bank. Help your child understand that you had to work for the money you deposited and that the ATM isn’t just a cash machine, but is just giving you what is already yours.
It is also OK to let your kids know when funds are low. If you feel like eating out but decide you can’t afford it, let your kids know that you do not spend what you don’t have. Explain the difference between needs and wants and that eating out is a want. This is a classic case of “actions speak louder than words.”
Golden Rule #3: Be Patient. Good habits take time. As you teach new concepts, realize that each child learns at his/her own pace. Some may pick up money concepts quickly. For others, it may take more time. If it becomes a battle or either side gets frustrated, it’s time to cool down and try again later.
It is also very helpful to have a plan in place before you begin. Using a formal teaching method or money management system will help both sides eliminate frustration. Find a money management system designed specifically for kids. Above all, remember rule #1, make it fun.
Golden Rule #4: Keep at it. Your kids will be excited to learn budgeting skills. Keep the excitement alive! Help them find opportunities to earn money. As they keep a budget, it may be helpful to meet on a regular basis to go over their goals and spending patterns. Give your child an incentive. When he/she reaches a specific goal, have a special night out or treat rewarding them for their hard work. Don’t underestimate the value of simple praise. The satisfaction that comes from setting a money goal and reaching that goal will reinforce the habits you are teaching. Help your child to succeed and feel the joy of success.
Golden Rule #5: Mistakes are Good. This may seem counter intuitive, but it is true. Think of it like this, would you rather your child spend foolishly on a toy when he’s 9 or make a poor purchase when he’s buying his first car? This is the training ground and mistakes will happen. The consequences are much easier to handle while they are still at home under your roof. Allow them to make mistakes. It’s OK. Help them learn from those mistakes and make better choices next time.
With these five golden rules in your tool belt, you will be much more prepared as you raise great money managers. Remember to use games, talk openly about money, have a plan or kid-friendly method of teaching in place ahead of time, be patient with yourself and your kids, keep at it, and allow the kids to make mistakes. For a plan that fits that incorporates all these methods and many more, head on over to Kidbudget and check it out. Most importantly commit to do something now. As William Shakespeare says, “In delay there lies no plenty.” So do not delay, start today.