Teach Children About Money This Summer

Posted: June 4, 2012

Teaching children about money management is an important concept parents and grandparents can teach children...

The summer months are a good time to start working with them to learn about handling money wisely.

Set an allowance for your children. Talk with your child and decide together how much an allowance should be and for what period of time, such as weekly or monthly. Preschoolers and elementary age children are not too young to begin learning about the importance of money and the difference between needs and wants. But children should not be given an allowance for performing regular household chores. Payment for regular chores implies all work must be compensated. 

     Be sure there is communication and understanding between you and your child concerning the allowance. One way to ensure consistency and clarity is for the parents and child to write an allowance contract. Items covered in the agreement might include the amount of the allowance, when it is to be paid to the child, what expenses it will cover, the amount of the allowance which the child may use as he/she chooses, and the date that the parent and child will review how the child has used his/her allowance.

     Since children learn by doing, it is important that parents provide opportunities and guidance that will develop experience, knowledge and skills in money management.

Parents can do this by: 

     * guiding and supervising rather than directing and dictating how money is saved and spent.
     * praising rather than criticizing, complementing their positive efforts, and not overcriticizing their mistakes, since mistakes are part of learning.
     * letting children learn from mistakes as well as successes. Discuss mistakes and share ways to improve money management in the future.
     * setting a good example by managing family income, keeping financial records, and living within your means. Children's attitudes and values about money are influenced by how parents spend, borrow, save, share, invest, and protect themselves with insurance.

Karen Thomas is a family and consumer sciences educator for Penn State Cooperative Extension of Lackawanna County.