5 Tips for Teaching Young Kids Money Management
by Ashton Slusher
Children look up to their parents and model the behaviors they see, so it is important for parents to display positive behaviors to follow. When it comes to financial behaviors, children should learn what to do, rather than what not to do, although both can be equal learning experiences. Showing young children how to handle money can be greatly beneficial in bolstering the child’s confidence and competence when they start making an income. How parents talk about money in front of their children can also greatly impact how children look at money. Some may see it as a stressful subject, where others see it as a way of helping the community. This post will give some tips on how parents can model behaviors one would want their child to adopt and ways to display the value of money.
- Make purchases with cash
Making purchases with cash allows children to visually understand how money works. There is an exchange of money for a product or service. Children can see that when the product or service is purchased, there is a decrease in the money their parent now possesses. Children are visual learners so this method will help them understand the use of money.
- Give children opportunities to make money
For children to know how to use money, they need to be able to practice handling it. Many parents assign basic chores that children must do, however, when giving them special tasks, it might be beneficial for the child to get compensated for the work. This allows children to learn that money is earned, and you are compensated based on your performance. Another part to this is after the child has completed the work and been paid for it, to tell them that this is all they will get for the month/week and to not ask for more. Children must learn to only spend what they have because money is not freely given.
- Have separate jars for giving, saving, and spending
You’ve probably heard this tip before, that’s because it is so effective! Adults generally have their giving, saving, and spending separated through different bank accounts, but this method allows children to visually understand how to separate their finances. The child also gets to determine how much of each “paycheck” they put in each container. This will help the child learn responsibility in how they allocate their money. At this point, children will know that they can only use the money that is in the “spending” jar and the “giving” and “saving” jars are to be left alone. Another tip would be to use clear jars so the child can visually see the money increasing.
- Play Monopoly
Not only can you bond with your child while playing a board game, but you can also teach them how to use money while playing. Monopoly teaches children to save because you must save enough money to buy a property or to be able to pay someone else if you land on theirs. It also teaches them that housing also has a cost. There is also a banker in the game so children learn they can go to a bank to get money as well. Monopoly can also teach you good (or bad!) conflict resolution skills during the inevitable dust-ups that occur!
- Teach stewardship
The most valuable principle you can teach children is stewardship. 1 Peter 4:10 states, “Each of you should use whatever gift you have received to serve others, as faithful stewards of God’s grace in its various forms” (NIV). Children must learn that everything they have belongs to God, and that includes their money. When one knows their money belongs to God, it makes one think about where and how their money is spent. If it belongs to God, then it should be used in a way that honors Him. This verse from 1 Peter also says we should use our gifts to serve others, and this plays into the “giving jar” from a previous tip. Children should learn to use their resources to serve their community and bless others in a way that shows the love of Christ.
I hope these tips are helpful and teach your children about how to handle money. It is important to teach children that money is a tool to fund their goals and aspirations and not something to idolize. Not only can it be used to help themself but also the community around them. It is essential to display good money practices in front of children because they learn young from the people closest to them first. Let’s help our children and grandchildren become the best stewards they can be!
Ashton Slusher is a senior at Liberty University and is our 2022 summer intern. She is majoring in Financial Planning with a minor in Psychology and she’s on track to becoming both a CFP® and CKA®.