Tips for Teaching Kids How to Manage Money
Managing money can be a tough task at any age. When you’re young, it’s particularly hard to balance wants over needs.
Managing money takes responsibility. If parents begin teaching their children at a young age it can have lifelong positive effects.
Beth Kobliner, author of the New York Times bestseller Get a Financial Life, says children as young as three can grasp financial concepts like saving and spending. Additionally, a report by researchers at the University of Cambridge commissioned by the United Kingdom’s Money Advice Service revealed that kids’ money habits are strongly formed by age seven.
Kobliner shares a few fun ways to teach your children how to manage money in an interview with Forbes. Here are a few tips:
- Create three jars labeled Saving, Spending and Sharing. When your child receives money, have them divide the money equally among the jars. Have him or her use the spending jar for small purchases, use the sharing jar for donating to someone in need, and use the saving jar for more expensive items. This will teach your child how to effectively budget money.
- Have your kids set a goal of buying something they really want. This goal should be something that takes months to achieve: over time, have them work toward their goal until they’ve earned enough to achieve it.
- Give your child some money, around 20 dollars, in a supermarket and have him or her make choices about what foods to buy, within the parameters of what you need, to give them the experience of making choices with money.
- Helping your child find a job is another great way to instill financial responsibility at a young age. This will show him or her that you have to work for things you want and show them that hard work pays off.
In addition to all of these wonderful methods, it’s imperative for you to set a good financial example. If your child sees you responsibly managing your money, they will want to do the same.
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Photo credit: Ryan Hyde