Benjamin Franklin coined the famous phrase, “A penny saved is a penny earned.” That sentiment may have been true two hundred years ago, but these days a penny saved can be two pennies earned with interest!
As today’s child becomes increasingly exposed to “must have” products marketed through television commercials and on the Internet, it is never too early to start educating him or her on how to responsibly save and spend their money.
As a parent, you may be all too familiar with the following scenario. Your child declares that he or she needs a new CD or cannot live without the jean jacket that everyone is wearing. Your response is, “Money doesn’t grow on trees!” This popular phrase makes sense to adults, but does your child really understand its meaning?
Even if your child is very young, you can help them understand the basics of money management. Explain the difference between needs and wants and that money is earned from working. Teach your child how to understand the value of money by making wise choices. A child as young as seven years old can learn about budgets. As your child gets older you can talk to them about credit cards, bank interest, and other areas of finance.
Establishing a weekly allowance for your child is a great way to help him or her understand the value of earning, saving and spending money. According to Linda Boelter, a certified financial planner and family financial management specialist at the University of Wisconsin, “A regular allowance helps kids take responsibility for spending decisions and encourages independence. Instead of getting money ‘on demand’ whenever they need it, children with regular allowances can learn to plan ahead–to anticipate spending needs and make choices about what’s most important.”
Here are 10 simple ways to help educate your child about personal finance and managing money:
Allow your child to make spending decisions. Whether good or bad, your child will learn from their spending choices.
Adapted from “Dollars and Sense,” in the April 1999 issue of Our Children, the official magazine of the National PTA®.
Books are a terrific resource to reinforce lessons on money management. These books are recommended by the Calvert Education Counselors.
For Younger Children:
Alexander, Who Used to Be Rich Last Sunday by Judith Viorst
The Go-Around Dollar by Barbara Johnston Adams
Pigs Will Be Pigs: Fun with Math and Money by Amy Axelrod
The Young Investor: Projects and Activities for Making Your Money Grow by Katherine R. Bateman
The Kid’s Guide to Money: Earning It, Saving It, Spending It, Growing It, Sharing It by Steven Otfinoski
Money Sense for Kids by Hollis Page Harman