Why raise kids with strong money skills?
Many people struggle with managing their money. Money management skills do not materialize from thin air, in fact they are acquired the same way we acquire many skills: with guidance, practice, and slowly over time. As parents, grandparents, or teachers, we have to create supportive environments which allow children to practice money management skills regularly. If we want our kids to be smart with their money, then we have to set them up for success one step at a time.
When we want to help our children become strong readers or writers, we make sure we provide the tools and the encouragement for this to happen. We read to our babies, we let our toddlers handle markers, we take preschoolers to story time, and we proofread our teens’ high school essays. It’s really the same principle when it comes to helping our kids learn money sense. They need to understand what money is, where it comes from, the real cost of things, the difference between needs and wants and most importantly they need some money to manage throughout their childhood. If we don’t do this, how can we expect them to suddenly be good with money at 18 years old when they are ready to leave home? We certainly wouldn’t expect an 18 year old to be able to write an essay if we hadn’t spent years teaching and letting them practice the skill of writing.
But I’m not so good with money….
An obstacle that some people face is the fear that their lack of money skills won’t allow them to properly guide their children. It’s a valid concern, but there are some easy steps and principles to follow that can help out. At different ages, there are key money concepts and activities that a child or teen should be learning and doing. It doesn’t have to be overwhelming because teaching money management starts at four or five years old, and new skills are added slowly throughout childhood and into the teen years.
Start with spend, save, share…
Whether children’s money comes from an allowance, is gifted, or is earned is not as important as what we direct them to do with it. Yes, we get to decide - sort of. Getting children to divide their money into three separate piles, spending money, saving money, and sharing money, helps them to get started on the road to good money sense. Some families use three jars marked “SAVE”, “SPEND”, and “SHARE” for this, so it is easy to allocate and children can see their money accumulating, disappearing and then building up again. The SAVE money is for the purchase of something special, and it should take a bit of time to accumulate enough to buy the item. The SPEND money is for immediate use. We may put a few restrictions on how this money can be used, like no candy, but part of the learning is letting kids make mistakes with small amounts of money in order to learn valuable lessons. The SHARE money is given to charity or to buy something for someone else. If a child has $10, she might divide up her money this way: $4 for saving, $5 for spending, and $1 for sharing. We decide with the child. Over time, these money jars are replaced by bank accounts, and the “Save, Spend, Share” principle is expanded to “Earn, Save, Spend, Share, Invest.”
Some kids will make poor choices with their money, some will never spend a cent, and others will seem like natural money managers. It’s all part of the journey in learning about money management. Helping children and teens develop a positive relationship with money and equipping them with the skills to manage small amounts of money, and later on larger amounts of money, is setting them up for money success throughout their lives. It’s never too early or too late to learn money management skills!
CBAL offers “How To Raise Kids With Money Sense” workshops and classes for adults on basic money management skills. Contact your local Community Literacy Coordinator or go to cbal.org for more information.
Community Literacy Coordinator
Columbia Basin Alliance for Literacy - Kaslo/Balfour