Money Management ABCs

Many kids today think that money comes from machines, or credit cards. Now where on earth did they get that idea? Teaching kids the importance and value of money is essential; teaching it at an early age is crucial.

With the ever-present April 15th tax deadline looming, you may be in a perfect state of mind to start teaching your children about money—and how to manage it.

Role-playing and pretend play are ways youngsters learn, and they love it. When you take the kids to supermarket, they watch what you do when you shop, and they want to imitate it. Playing “grocery store” is one of the best ways to start your youngest on a path to understanding how money works. How many pennies are in a nickel, how many nickels does it take to make a dollar? Learning Resources Teaching Cash Register helps kids learn the different denominations of coins and currency, and how making change is a lesson in adding and subtracting. The total is adjusted for using a coupon. (Ages 3 & Up, Learning Resources, $44.95).

If your kids are six or older, it’s time to start teaching them basic money concepts. And yes, it is up to you to teach them. Most schools don’t have “money education” programs – but that’s another story. Set the groundwork at home. Teaching your kids about money at an early age gives them building blocks to make good financial decisions throughout their lives. “Becoming money-savvy is not a passive activity. If we as parents want to raise money-savvy kids, then we will need to become much more proactive in giving our kids the financial skills that they need to succeed in the real world. Even if we as parents are not as financially savvy as we need or want to be, we can still teach our children what they need to know, and perhaps learn a little ourselves in the process, without undertaking another college degree in the process” instructs Susan Beacham, a 20 year veteran of the financial world, mother of Allison and Amanda, and financial literacy teacher.

In order to help kids develop a sense of delayed gratification, learn the importance of planning for future needs and wants, and to discover that saving can be as provocative as spending, Beacham founded The Money Savvy Generation (www.moneysavvygeneration.com). Beacham, aka Mrs. Money, offers three simple but powerful credos for teaching children basic money management: Teach money choice, Teach them to set goals for those choices, Keep your money promises.

“As a parent, you need to teach your child that there are four choices for money – Save-Spend-Donate-Invest - not just one.” Says Beacham. By showing them how Mom and Dad use all the money choices, kids will want to participate in a grownup money world. “They will model their behavior after your behavior. If you use all four choices, they will use all four.” Early, consistent, habit-forming mantras about “money choice” are the first steps in educating your children about money.