Let’s start this “Managing Money Tips by Age” series with teaching kids about money. We always start things at early age. Teaching kids about money doesn’t have to be complicated. You can turn everyday activities into impromptu lessons.

Here’s the summary of the tips to manage money at child age:

Give an Allowance

- Giving kids an allowance is a great way to teach hands-on money management. According to experts, parents should provide spending guidelines, but allow children to make their own decisions — even the poor ones. These make the most memorable lessons. And making small mistakes now sure beats making big one later!

- Beginning at age four or five, parents can begin to give their children an allowance for payment of certain age appropriate chores performed around the home.

- Before giving an allowance, parents need to set family guidelines regarding allowance spending and discuss these guidelines with their children prior to giving the allowance.

- The allowance should continue be provided until the child leaves home, as long as the age appropriate chores are completed.

- Parents need to teach children to save a portion of their allowance and to budget for specific items they may be interested in purchasing.

- Pocket money awarded weekly or monthly helps children see the value of money when wanting to purchase something. They learn to understand that things don’t come for free.

- Consider making a rule of saving 50 percent of the allowance and keeping 50 percent to spend on items in the future.

Part-time Job

- As soon as children turn of age for a part time job (this may be only a few hours per week) consider having the child apply for a position. Part-time jobs are a great opportunity to teach children about the importance of earning income.

- Potential part-time positions to begin “employment” are: babysitting, mowing lawns, delivering newspapers, washing cars, mother’s helper, etc.

- Again, set guidelines ahead of time about the percentage of money they will save and the percentage of money they can afford to spend.

Save Money

- Opening a bank account is a safe way to keep your money secure. (A bank account is much safer than keeping money under the bed!) Interest on bank accounts also allows your money to grow.

- As soon as children begin to accrue money, and this often begins the day they are born, open a bank account and begin putting money in the account.

- Take your child to the bank and open a savings account in his name. Teach him how to complete a deposit slip and keep track of his balance, put money in their own account with your guidance.

- Once the account has reached $500.00, talk to your children about opening a CD and consider moving the money to this type of higher interest account.

- Buy a few shares of stock in your child’s name, choosing a child-friendly company she’s familiar with. Together, you can track the stock’s progress.

Get a Checking Account

- Invite your child to “help” you pay bills by giving him a play checkbook and showing him how to write checks. Since kids love imitating mom and dad, this is a great way to teach kids about checking accounts.

- As soon as children enter junior high, have them open a checking account with your guidance.

- This is a great opportunity for them to see how money comes in and how money goes out.

- Teach them how to balance a checkbook and keep updated on their account.

- Teach them how to pay specific bills using their checking account as well.

- Make sure they are completely responsible with the checking account before you consider providing an ATM for a child.

- Parents must teach children how to keep their bank accounts safe, for example, not to give their PIN out to anyone. Children must also be taught how to use an ATM.

- Bank accounts for youngsters have added benefits. The FNB packages include a debit card, which means that your child can transact without worrying about having to carry cash. Additional benefits include a teacher helpline, career counseling service, a computer helpline, movie and music hotline, and a teenager crisis helpline.

- Teach your children to review their bank statements every month some basic banking concepts so that they can understand banking. Simple terms like ‘deposit’, ‘withdrawals’, and ‘interest earned’ should be explained. Don’t get monthly statements sent to them

Get a Secured Credit Card

- Once children enter high school, provide them with a secured credit card with money they have already saved. So many young adults go to college and open credit cards without understanding the implications of their purchases and nor do they understand how much they will have to spend paying off the credit cards that have finance charges attached.

- Teach your children early about the dangers of credit cards and teach them how to be responsible with credit cards early on. Make it a requirement that any purchases made with the secured credit card are paid off every month.

Lead By Example

- Be financially responsible so your children have someone to look up to.

- Pay your bills on time and don’t spend money you don’t have.

- Parents should teach children about budgeting so that they can understand about saving towards a goal.

- Include your children in discussions about major financial decisions such as a purchasing a new home and discuss openly the sacrifices the whole family will have to make when this occurs. This helps children understand what needs to happen to make major financial decisions and it will help them become more financially savvy as an adult.

Give to Charity

- Each year explain to your children the different charities you give to and explain why. Explain the importance of your donation to the charity as well.

- Suggest that your child donate a portion of her money to the charity of her choice. Talk about the good her money will do, and allow her to experience the satisfaction of giving.

In addition, here are some other simple activities you can share:

• Practice making change together with pennies, dimes, and quarters. Kids love “playing store,” so turn it into a game.
• There are four components to money management: spending, saving, investing, and sharing. Giving your child a four-compartment bank — or four separate containers — is one way to get this point across.
• Invite your child to help you grocery shop. Give him a short list and teach him how to compare prices. Or let him be your coupon manager and tally up your savings.
• Play money-related board games appropriate to your child’s age.
• Praise children for saving and reinforce the habit of saving.
• Reward youngsters with ‘bonus’ pocket money for odd jobs done around the house. This will show them that hard work is rewarded – a value that will instill a strong work ethic.

Sources:
Teach Children About Finances
Manage Money
Help Youngsters