Teaching Children About Money Matters - Janet B. Pearson (2024)

Many adults today live paycheck to paycheck and are not good at managing money. My adult children are pretty much in that category so did we as baby boomers hurt our children by not taking enough time to teach our children basic financial facts?

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My Personal Situation

For myself, as a child, my family was poor. I don’t think we knew it though because it seemed like everyone else was in the same situation! In some ways, I am glad I grew up without “means”. I learned to grow a garden, do laundry, can food, sew, cook, and do basic repairs (my Daddy could fix anything!).

When I was a teen, my family’s situation improved, and we were able to do things we had not been able to when I was a child. I was finally given an allowance – which I totally earned by doing chores. I also became the neighborhood babysitter and earned money to buy things I wanted (but may not have needed 😊).

My parents taught me the value of working hard and instilled good financial practices in me, including tithe at church. In high school, along with Algebra and Biology, we had home economics and shop. In home economics, we learned how to write checks, balance a checkbook, and how savings could mount up. I’m afraid that is not stressed in today’s schools.

I think as I had children, I spoiled them because I wanted them to have “things” I didn’t have at their age. Unfortunately, I didn’t do them a favor by splurging on them. I did try to teach my kids (both now grown) some things financial, but I did not do as good a job as my parents!

Money In Today’s World

Now I have grandchildren and recently paid my oldest (14) to help me with some cleaning chores. Mamaw is not quite as nimble as I used to be! I offered him a fair wage and he worked hard for it. He also earns some spending money at home by mowing the yard. Paying him for his help and talking as we worked, I decided to research some tips for teaching children money sense. I may not have hit the mark completely with my kids, and it is not an exact science, but maybe these tips will spark a conversation in your family about money matters.

Tips For Teaching Children about Money

Preschool – Even Young Children Can Learn Good Money Practices

• Start by being a good example. I cannot stress this enough. Children learn by what they see.
• You need money to buy things.
• Money is earned.
• There is a difference between wanting something and needing something.
• Instead of a piggy bank, use 3 clear jars: Save, Spend, and Share.
• Teach coin and paper money denominations.
• Let them learn how to spend play money and how the different coins and bills relate to each other – 2 nickels = 1 dime, etc.
• Use a play cash register to practice what they learn.
• When they have saved enough for a special purchase, let them take their savings and pay for the item themselves. It will make an impression on them to turn over their own money.

6 to 10-year-old children

• Shop around for the best value.
• Prioritize your “wants” – sometimes you must wait for something you really want.
• Let them earn money by doing defined chores instead of an open wallet of an allowance.
• Continue the 3 jar concept to teach saving, spending, and sharing. Let them pick the church or charity for their giving jar.
• Explain the difference between debit cards and credit cards.
• Teach them the basics of budgeting and tracking what they spend. This is a habit that will serve them well.

11-18-year-old children

• Let them open a bank account. This will take some guidance, especially for younger ones.
• Delve further into budgeting and the different ways to budget such as the envelope plan and spreadsheets.
• One way to help older children understand the cost of “wants” is to have them plan a pretend trip to another city and how much fuel, food, lodging, and other things would cost.
• Talk about college and the associated costs. Stress the importance of scholarships and avoid student loans. Let them know what you can and cannot do to help pay. Many college students work to pay their way and they usually appreciate their education more than someone that has it all paid for them.
• Teach them about credit cards. As soon as they reach 18, they will be inundated with credit card offers. They need to understand the responsibility of debt and how high credit card interest can make repayment almost impossible. Experts agree that using a credit card is only good if you can pay them off each month.
• Explain how finance charges affect the total cost of something like a vehicle. Once when buying a new car, the salesman kept emphasizing the monthly payment. With a particularly good credit score, I was more interested in the finance rate they were offering and the total cost.
• Encourage them to earn money. School and family come first, but it is good for children to understand they need to work for what they want.
• Talk to them about payroll taxes and other things usually deducted from payroll.
• Explain how employers may provide benefits at low or no cost and how that adds to your total compensation.

Even young children can learn good financial habits. #TeachMoney #MoneyMatters Click To Tweet

Start teaching children about money at a young age and they will become responsible adults. Remember all children are different and may need different approaches to learning.

I hope these tips will help you teach the children in your life how to handle money responsibly.