Money Management Activities for Kids

Money management is a skill we should all learn when we are young and a skill that should be refreshed often.

Unfortunately, it isn’t taught often in schools anymore to the detriment of current and future generations. Once your children know how to count and understand how much each piece of currency is worth, it’s time to start teaching them about money management.

In fact, my kids often remind me of my failings when it comes to money. I’m pretty frugal, but occasionally I make silly financial decisions.

Years ago my son and I ran to the store to pick up the items needed to make his birthday cake. He was almost twelve years old so we separated in order to find our items quicker. I asked him to get the Oreos. (A bit of background here, we buy Oreos about once a year, and it is almost always for a birthday cake).

He ran up to me with a package of cookies in his hand and a big grin on his face. I looked down and noticed that he picked the generic brand of Oreos. I then (foolishly) told him that he must have made a mistake because the package he had in his hand wasn’t really Oreos, but a cheap knock-off brand.

He smiled and said, “I know mom, and they only cost $1.69, the Oreos are $3.” I then explained to him that this brand couldn’t possibly taste as good as the real deal, but if that is what he wanted I would buy it.

What was I thinking!!! Here was my son, being a smart shopper and me Toni Tightwad, wanting to pay double for a bag of cookies! We bought the cookies, and I am sure you will all be shocked to find out that they taste just as good as Oreos, if not better.

This was a lesson I’d been trying to teach my children for many years (try the cheaper brand, you might like it), but when it came to something that I love (Oreos) I wasn’t willing to take my own advice.

This whole event started me thinking about how we are training our children to handle money. Like many kids, when my children receive money they want to immediately spend it on something.

It really doesn’t matter what they spend it on, they just want to spend it! In order to help curb this tendency we have been helping them see how to do things differently.

Here are a few things we’ve tried over the years to help create a frugal mindset for our kids.

How to Teach Children to Save Money

• They clip coupons and view the savings on the receipt.
• They actively search the sale ads and coupons for the best deal.
• We have taught them to try generic brands (of course they have learned this one better than I).
• When they do have to spend money we try take them to a thrift store or yard sales. While they are shopping we encourage them to find a gift for their siblings if there is a birthday coming up.
• Occasionally we will come home from a thrift store trip and look up online the actual cost for the items purchased. Many times we have saved $100’s of dollars. They kids are always impressed.
• They have been with us on many of our dumpster diving excursions.
• They each have a bank account and are able to see their money grow each month.
• We explain to them how much certain things cost so they understand where our money goes each month.
• If they break a toy we do not replace it.
• They play an active role in recycling and reducing waste.
• When they really want to purchase a large item, we usually have them wait a month, to make sure they really want to buy it, and then see if we can find a used one.
• We have allowed them to earn money so they understand the value of work and money.
• They pass clothes on to friends and receive clothes as well. They are always excited to get a bag of “new” clothes.
• We have tried to be as honest as we can about our financial mistakes with our children. Maybe they can learn from us rather than repeat them.

PSECU, a credit union in Pennsylvania, created this chart, which includes age-appropriate money management activities, books, and smartphone apps for each age group.

Take Your Children Shopping with You

This is one activity that you can use for children of nearly any age – simply take them grocery shopping with you. It’s a great way to teach them everything from comparison shopping to sales and even basics like mathematics and how to calculate sales tax.

Take the opportunity to explain things like coupons and store brand vs. Name brand to teach them that you can save money even as you’re spending money and buying food for the house.

Pay With Cash Whenever Possible

We haven’t become a cashless society quite yet, even if most of us would prefer to use our debit or credit cards. Paying with cash, especially around your children, is a good way to give a physical significance to the act of spending money. It also enables them to interact with the transaction – simply hand them your wallet and have them count out the correct amount of money to cover the transaction.

It’s easy to spend more money than you have when it’s all digital. Instead of letting your kids get the idea that they have money because they have a card, teach them how significant money actually is.

Open a Savings Account for Them

Opening a checking and savings account is an important first step in your child’s financial life. You can open a custodial account for your child as soon as they have a social security number. However, once they reach the age where they start to understand the importance of money, you can walk them through how to use their checking and saving’s account.

For younger children, this could be as simple as saving for a new toy or a game console. Once your child gets older, it becomes useful for saving for larger purchases like a car or saving for college after they graduate.

Create a Budget Together

Sit down and take the time to write a budget together. It could be a budget that you can use in your daily life – write out the bones of a budget, including your monthly income and your bills and let them figure out the best way to budget your income to pay those bills. Include other expenditures like groceries, medical, insurance, and others that can pop up unexpectedly.

Teaching our children – and the next generation as a whole – how to manage their money is a skill that they will use throughout their lives and could keep them from falling into the trap of debt. Don’t assume that children don’t need to learn how to manage money just because they don’t have an income – the longer you teach them, the more likely the skills will stick.