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.
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.
This post is sponsored by PSECU, a Pennsylvania-based credit union.