Kids and Money

No matter what age your children (or grandchildren, or...) are, NOW is always the time to work on building financial skills. Like any skill, financial management develops with PRACTICE. And a child who begins learning a skill early in life will usually be more skilled. (Think of the best wrestlers or gymnasts - usually they started at an early age!)

When it comes to personal finance there are some key skills all young adults need: living within limits (i.e. spending less than they earn); comparison shopping; stretching resources; planning ahead; managing a checking account (including debit cards and on-line banking); wise use of credit; prioritizing goals, needs, & wants. Nearly every child of school age can start practicing some of these skills. Obviously, a 6-year-old can't manage a checking account (although she may be able to observe her parents using one and discussing it), but a 6-year-old can start doing some comparison shopping, and making choices to live within limits.

The critical element here is practice. Everyone learns by doing. Just being told what to do or how to do it is not enough to really learn a skill. Some learners will self-teach by trying things out, asking questions, and practicing on their own. If you leave your children to self-teach their financial skills after they become adults, they may eventually learn most of the skills needed, but it may take a very long time, AND it may involve some very costly mistakes which could haunt them for decades.

That is why it is so important to create opportunities for young people to practice financial skills before they are out on their own. Younger children can help make some family shopping decisions, and when they have money of their own to spend they can learn about limits and deciding which option is most valuable. By early-mid grade school children are ready to manage a steady income, which parents can provide in the form of an allowance. Checkbook management skill-building can begin in the teen years.

Think about your own children, and the children you care about. What financial skills are they already practicing? What other skills do they still need a chance to practice? What can you do to help create opportunities for practicing those skills?

As summer vacation begins, with a break from formal education for most children, look for opportunities for informal education. If the kids are at home for the summer, involve them in planning food shopping; summer snacks and easy-to-fix lunches can be costly, and involving the kids in planning (within a budget) for that spending will help them learn a key skill -- and will also help keep your food spending within reasonable limits. Other ways to involve the children are plentiful - haave them help manage the checkbook (writing checks, recording transactions in the register, adding and subtracting - and older kids can reconcile the bank statement when it arrives). Vacation and special-event planning create more opportunities. Just keep your eyes open and you will find numerous ways in which your children can practice financial skills this summer and throughout the year!

by : Barb Wollan
ISU Extension Family Resource Management Specialist