Money Management for Kids: Save, Share, Spend
As adults, the topic of money is often seen as a highly private, overwhelming, and misunderstood area. There is so much to learn, so much to control, and so much to mess up. That’s why a lot of Americans are in debt, foreclosure, or living paycheck to paycheck. As with anything worth learning, the best and most well-received knowledge comes to us when we’re a child. Let’s help prevent our children from making the same mistakes we have by simply educating them (and possibly ourselves) on the basics of good money management; beginning with the concept of save, share, and spend.
Before your kids can divide their money into these 3 essential categories, they must first receive money, whether that is through Christmas or birthday gifts, allowance, or part-time jobs. Every time they get a dollar, it should be good practice to discuss what they are going to do with every cent of that dollar.
Start your kids with saving money from a very early age. It will become a habit and a normal, easy thing to do if they’ve grown up doing it. Make saving a fun, positive experience. Be a good role model. Show your kids how you are saving your money too. Just as adults thrive with goal setting, kids benefit from setting their own goals too. Consider having two saving categories: short-term goals and long-term goals. Talk with your child and figure out what kind of things they would love to do or love to own. Give them a visual reminder (such as a picture of a doll (short-term) or a picture of their first car (long-term)) of what they are saving up for and discuss how much money they need and how long it will take them. If your child is too young to discuss goals or if your older child is indecisive, still make them save. The amount is a personal decision, but saving around 50% of their “income” is a good starting point for kids.
- Preschoolers: Use a clear container for your preschooler to drop their coins and bills into. This way they can actually see their money growing.
- School Aged: Teach your kids to put money in their savings jar first. That’s a sure-fire way to make sure saving becomes a priority, and not an afterthought.
- Teens: Go with your teenager to the bank and open a savings account (and checking if he has a part-time job) in his name. Show him how to manage the account.
The first step in raising generous, caring children is teaching them how to give to others. We start as early as toddlerhood, when we ask our children to share toys with one another. It’s even more important as they grow older that we teach them selflessness and how to give back to their community and to important causes. While money definitely goes a long way, teach your kids to share their time and talents as well. This is another area where walking the walk and not just talking the talk is crucial to your child’s cooperation. Make sure they see you giving your money, time, or resources away to those in need. If you are a member of a church body, sharing would be considered “tithe,” but it’s also a good idea to encourage your kids to give money to other areas in addition to the church. A good rule of thumb to start your kids off with sharing their money is to have 10% of their “income” go into the sharing jar.
Moonjar is the perfect visual tool for kids to practice their saving, sharing, and spending. Made up of three sections, each labeled with SAVE, SHARE, or SPEND, these tin jars fit together like a puzzle and come apart just as easily for individual use. Now kids are able to keep all their money in one organized area, and drop in their dollars and coins with ease!
- Preschoolers: The concept of giving away money to young kids is hard, so get them involved in the process. Use their “share” money toward making Blessing Bags. They can pick out an item at the dollar store, use their money to pay for it, then make the bags at home with your help!
- School Aged: Research and talk with your child about what things they are passionate about. If they love animals, they can save money to give to the local animal shelter. If they love books, they can buy books to donate to a children’s hospital or women’s shelter.
- Teens: Consider matching the amount your teen has saved, and together give a larger donation to the cause of choice. This teamwork not only benefits the less fortunate, but it’s a great way to bond with your teenager.
We saved the best for last! You might not think you have to teach your kids how to spend money, but this is the one area where most people’s money problems begin. Teaching your kids how to spend their money wisely is crucial. This is where tough love and “learning from your mistakes” comes into play. The remaining 40% of your child’s “income” is now in the spend jar, and it’s up to them to decide what they want to do with it. If they want to take it all and raid the candy store in one fell swoop, so be it, but they need to be taught that once the money is gone, it’s gone. Teach your kids the value of items, how much things cost, needs versus wants, and how to buy only what you can afford. Guide them in their spending decisions, but don’t be afraid to let them make the final choice.
- Preschoolers: Start teaching your preschooler the names of coins, how to count them, and how they fit together. Show him when you’re at the store how you trade money for items you want. Read age-appropriate books about money, such as Junior’s Adventures.
- School Aged: Step back and let your child pay for her items herself. Have her count out the dollars and coins, let her give the money to the cashier, and allow her to take the receipt and change. Show your child you have confidence in her abilities, and let her feel like a little adult for a moment!
- Teens: If your teen has a cell phone or a car, start having him be responsible for paying his cell phone bill and buying gas for his car. This will give him a taste of the real world, help him value his “stuff” more, and teach him about prioritized spending.
“Raise a money-smart kid in this debt-filled world.”
– Smart Money Smart Kids
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Dani lives in North Carolina with her two preschoolers. She is a stay-at-home/work-at-home mom who loves to clean and organize anything and everything. Her happiness is found in Jesus, days at the spa, and combating dark chocolate peanut butter cups with everyday workouts at the gym. She owns a wedding, lifestyle, and freelance photography business, Dani Nicole Photography.