Although some parents think it is strange or not necessary, developing money management skills is an important part of your child’s education. As they grow up, money will play a larger and larger role in their life, and they need to be prepared for that. If they aren’t prepared, they may take bad risks with their money or be completely unable to manage their finances as an adult. Luckily, there are plenty of ways you can help your child learn to manage money comfortably.
1. Give your child an allowance.
Giving an allowance has fallen out of favor in recent years, but it is a helpful tool. The benefits are that they have actual money to work with and learn how to handle and that they can see the real implications of what happens when that money runs out (or when they have more). Don’t become a credit card for them; become a safe and responsible bank. The amount and frequency should be tailored to your child’s life and their age, as well. For example, you wouldn’t give your kindergartner $40 a week just for going to school each day; instead, give them a dollar for every extra chore they do to help around the house.
2. Don’t be afraid to refuse.
As a parent, you have probably told your child “no” to a million things before. At the same time, telling them no firmly when it comes to money is also important. They may ask for a loan or for an allowance increase without having a good case for it. If they don’t make a good case, don’t grant it to them. If it’s too easy for them to get more, they won’t develop the skills they need to navigate similar situations in the future
3. Show them how money works in daily life.
Include them when you go grocery shopping or when you pay the bills each month. There is an old-fashioned idea to hide finances from your child, but this only shelters them from the reality on how budgeting and finances work. It’s important to give them exposure to those ideas early on so they aren’t blind-sided later in life. This doesn’t mean you should invite your child to make larger financial decisions. That is still your job and they should not be part of those conversations. However, showing them how expenses add up each month or week can be a great way to show them the “math” part of finances.
4. Share your financial plans.
Again, this doesn’t mean elevating your child to another partner to manage your finances; instead, tell your child what sort of goals you have. For example, you can tell them about a long-term repair project you have in your home or about how you’re saving up for a new car. You can even show them how their college savings account, if they have one set up, grows over time.
5. Model responsible behavior.
As part of showing how money works, make sure you are leading by good example. If you or your child notices that expenses are up and income is down, tell them the responsible choices you’re making to balance that out. Or you can explain to them how you are saving up for a bigger purchase and encourage them to do the same with their allowance money.
6. Teach them about choices.
Similar to modeling responsible behavior, teach your child on how to make smart choices with their money. Explain to them how to value certain products. For example, a cheap pair of shoes for $10 is less money, but you will have to replace them four times in the next year, leading to an expense of $50. Instead, they can save up and buy a $40 pair of shoes that they won’t have to replace because it’s made of better materials. Additionally, explain to them how rewarding it can be to save up for something bigger and more valuable rather than spending their entire allowance on small purchases.
7. Use comparisons your child can understand.
It’s important to keep your child’s age in mind. Relate money to things they already understand and have experience with, like candy, toys, or school supplies. Money, especially for younger children, can seem very abstract, so it’s very helpful to relate a given amount to something concrete.
8. Let them learn on their own.
Although it’s important to explain and show them everything about how money works, experience is ultimately the best teacher. Let them sit with the consequences when they run out of their allowance and can’t buy something they want or don’t track their spending well enough to understand where their money went.
If your child is struggling with money, especially with how it relates to their math skills, you can enroll them in Math Genie. With money or even just numbers, the program at Math Genie is designed to help your child build their skills and their confidence. The teachers are helpful and engaging, and your child will even have fun learning.
Like it or not, money is an important part of daily life and your child will grow into a world where they need to understand how to manage it. There are plenty of resources available, and you are the first resource they will have. Help your child have fun with it, too!
