Teaching Children About Money

The American Bankruptcy Institute, the Federal Reserve Board, and the National Endowment for Financial Education have provided the following statistics:

• Personal bankruptcy filings in this country remain at historic highs.
• More young people file for bankruptcy than graduate from college.

As parents, we should teach our children to be responsible with money so we can break the vicious cycle that many Americans face today. Children look to their parents as role models. They typically develop their attitudes and habits through the examples they see in the home and look to their parents for advice in life skills and money management.

Children learn from play. Parents who recognize this fact take time to play games with their children. What a golden opportunity to teach your children about money! The examples listed below are just a few ideas for educating small children in their early years.

• Play grocery store or bank with play money.
• Let children pay for items (with your money) when shopping.
• Take them to the bank to open their own savings account.
• Have children clip coupons and give them some of the amount saved.
• Set up 3 jars: one jar marked "savings," another for "spending," and the third for "charity." Encourage them to divide their earnings equally among the three jars.

As children grow older, you can begin to involve them in actual life situations that they can understand. These ideas help reinforce what they have already learned.

• Give them odd jobs to earn money.
• Take them to the bank and let them make their own deposits.
• Have them check prices through newspaper ads, catalogs, and flyers before making a purchase.
• Take them grocery shopping to learn to compare labels and prices.
• Match part of what they save to make a purchase of their choice.
• Play family board games involving money, like Monopoly, Life, and Pay Day.

By the time a child has become a teenager, they will have greater awareness of what it takes to earn money, and how much their earnings will allow them to spend.

• Encourage them to keep a journal to record what they have earned and spent. This will help to establish a balance between wants and needs, keeping records, and taking responsibility for the decisions they have made.
• Help them to develop an uncomplicated budget for their spending.
• Let your child assist in some decisions that will help benefit the family, such as budgeting and planning for a family vacation.
• Allow your children to do the family's grocery shopping.
• Discuss the pros and cons of using credit cards.
• Have them assist in shopping and comparing the prices of cars, as well as the cost for car insurance.
• Involve them in discussions about planning for college.