How to Teach Your Children Money Management

Many young children today don't realize the value of a dollar. They just look to their parents as the ones with the money and if they need some they assume it will be given to them. While some children do earn their money by doing chores around the house or working odd jobs such as raking leaves, shoveling snow, or babysitting, others might not have to do anything to get an allowance.

One problem that many adults have is money. We get into credit card debt, we get behind on our bills, and we don't know how to make our money work for us. However, if we learn proper money management techniques when we are younger, by the time we are responsible for bills, credit cards, loans, and mortgages, we will be better prepared in handling our financial affairs. When children are young, one of the first gifts they may get is a piggy bank. This is supposed to be the start of teaching them how to save but in most cases these banks are cracked open to buy toys, games, or even ice cream from the ice cream truck.

The most memorable grade of my entire school experience was 4^th grade. I believe I learned the most in that grade but the most memorable thing I remember is learning how to balance a checkbook. Everyone in the class had a "bank account" with a checkbook. We learned how to write checks, keep track of deposits and withdrawals, avoid overdrafts, and of course how to spend. By doing various things in the classroom we would earn money to put into our accounts. Of course the money was pretend but in the class we used it to purchase real things. Every month or so we would have an auction where we could bid on items such as games, beach towels, books, toys, and other little things.

This experience no doubt helped me and my classmates in our money management skills. I don't know how many of them continued to practice what we learned as they got older but I believe this is an excellent way to start informing children about money. There are many adults who can't even balance a checkbook and by the age of 9 I understood it all.

Instead of just giving the child a piggy bank which they will be tempted to dip in every now and then, open a savings account in their name so their money can gain interest. Teach them the importance of money management and let them start at a young age. Instead of just giving children money for all of the extra things they ask for, make them do a few extra chores or odd jobs to earn the money themselves. This will also give them a greater appreciation for the things they buy. The lesson I learned in the 4^th grade can be helpful to them too. Teach them to balance a checkbook and even help them learn the basics with a "pretend checking account." I believe this was an excellent way for me to learn because by the time I got my own real checking account at 18, I knew how to keep it in order. You can even start a portfolio with your little one. They can view the money mistakes they've made as well as the wise choices they have made over the years.

Everyone should be money smart, not just adults. If children learn money management skills, they are less likely to get screwed over for loans and credit cards when they get older. They will be aware of what to avoid and what to invest in. Maybe more importantly to some parents, they won't always have to ask you for money.