How Should Children Learn Personal Finance?
Good money management is one of those important life skills that not every child is taught. After all, there are plenty of parents out there who aren’t good at it.
If you’re a stay at home parent, you’ve probably had to learn some tough lessons about money. Make sure you pass those on to your children, and start young. You can keep it age appropriate as you go.
Preschoolers and kindergarteners will mostly be interested in learning the names of the various coins. Even when they spend money they may not have much understanding as to the value of it. But I’m all for giving young children a budget to buy gifts for birthdays and holidays when making a gift isn’t what you want them to do.
As children get older, allowances can help them to equate earning money with its value, you can help them learn more about budgeting. Consider requiring them to save a certain amount, perhaps even donate a percentage to charity. How you handle this depends on your own values, of course.
By high school, you need to make sure they can budget well. They may have a lot of wants, especially in terms of fashion, and that can be a great time to teach them about the value of money.
Make sure they learn to use a checkbook correctly and can balance it. Teach them about credit cards. You want your children to be able to handle a checking account as well as credit as well as possible when you aren’t supporting them financially anymore.
If you’re lucky, your children’s school will help in this area, but not all schools do much to teach children about money, and that means you have to handle it on your own.
Of course, the hardest lesson can be the value of money. If your children see you spending money frivolously, that’s the lesson about money they’re going to take. Teach by example as well as by limiting your children’s access to money sufficiently so that they feel the limits. You don’t want your children to have absolutely everything they want without effort.