Jan. 22, 2016 // WorkLife Wisdom: Teaching Children and Teens How to Manage Money
Taking time to impart smart money habits on young people helps them develop lifelong skills for handling money responsibly. If money management hasn’t yet been a point of discussion with your children, you might consider the following tips for including finances as part of their key life lessons.
- Teach money and savings concepts early. Introducing your children to the responsible use of money can start as early as preschool. A very young child can learn to put coins in a piggy bank. Teach them to tell the difference between a penny, nickel, dime, and quarter.
- Talk about where money originates. Explain how the money you spend comes from the work you do. With that money, you pay for important expenses like food, housing, and clothing. Explain that money doesn’t just flow endlessly out of bank machines!
- Teach the difference between needs and wants. Learning the difference at an early age can prepare children to make better spending choices in the future.
- Start an allowance. Depending on a child’s maturity, set up a small payment for their regular help with a specific chore or a list of chores. They’ll learn about associating money with effort. Consider paying in denominations that encourage saving. For example, instead of a $5 bill, pay in $1 bills and encourage them to save at least one.
- Use shopping as an educational opportunity. This could include showing kids how to make a grocery list, compare prices of brand versus generic items, use coupons, shop on a budget, sort coins and count change. As an incentive, consider giving them the money saved via coupon use.
- Reward children for saving. If they’ve reached a money-saving goal within a certain timeframe, enthusiastically recognize their achievement. Consider matching the amount they’ve saved.
- Encourage earning. For pre-teens, introduce ways to make money, e.g., bake sales, lemonade sales, etc. You never know when neighborhood commerce might inspire a future entrepreneur.
- Help teens become money-savvy. Teach them how to use and keep track of a bank account, handle credit cards responsibly, and avoid the perils of debt. Many teenagers don’t understand that credit cards are a form of borrowing, and that interest owed can accumulate quickly.
- Encourage them to work if there’s time. Introduce the concept of a job or doing paid work informally if their school schedules allow. Work examples can include doing extra chores or projects at home, doing yard work for neighbors, or getting a part-time job after school.
- Explain saving for college. Saving for college is a good way to demonstrate working toward a long-term financial goal. Show teens how you set up and contribute to their college fund.
- Model smart financial behavior. Let your children see how you save money by being frugal instead of spending freely on impulse items or luxuries. The things your children hear you say and do about money will have a big influence on the attitudes they form themselves.
Accessible 24/7, your FAA WorkLife Solutions Program offers many resources and services to help you and your family. Options available through the program include concierge services to help with everyday events needing your time and attention, child and elder care options, legal and financial services, in-person counseling, and much more. Call your program at 1-800-234-1327, TTY Users: 1-800-456-4006, or log on to www.MagellanHealth.com/Member to begin accessing these services today.