Kids Learn to Manage Money from Parents who Learn to Manage Money

Just like everything else that they soak up, kids learn to manage money from parents who learn to manage money. The better you are at knowing where your money is, how much you have, and whether or not you can afford an extra purchase sends a lot of different signals to kids. Okay, okay, you roll your eyes, I never balance my checkbook but I always know that there is enough there and I never bounce a check. Well, then you would be among the majority of us who are trying to teach their kids good money management tools when we are not on top of our own financial picture. Just because we aren't calling the bank or dodging creditor calls doesn't mean that we are teaching good money management skills. It just means that we have enough in the bank to cover us. If we had less money in there, our habits would create situations like those just described.

Money management is more than just keeping the bank balance above a certain number. It is knowing what is coming in and where it is going out. It is saving a percentage and it is using money wisely. These are skills that are never taught adequately in school, and thus we really need to ensure that our kids understand what money management looks like and how they will apply it to their own life.

Let me digress for just a moment and let all of you between the ages of 30 and 40 know that we come from a generation that wasn't taught much about money. Those of us who grew up on Reaganomics and enjoyed the prosperity of our parents in the eighties weren't faced with much financial education because everyone was too busy enjoying their success. So if we want our kids to have a better understanding of money and how to use it to their advantage, we have to learn a little more ourselves if we haven't done so yet. That's not a bad thing, as the more we learn the more we are able to make our money work harder for us and the more we save in the process.

I have known parents who have placed a child in charge of balancing the checkbook once their math skills were appropriate. This taught the child not only better math skills but also what the family income was, the overall expense that the bills rang up, and what was left over at the end of each month and what was done with it. For those kids who mastered the project, they came away with a stronger understanding of grown up life, the importance of income exceeding what the bills "should" be, and how to stay within a budget. Of course, it's not a project for every kid and parents have to be willing to go along behind them and make sure that it was done correctly.

Whatever method you use to help your kids grasp the concept of money management, it is important that you develop a clear understanding of the basics so that they can grow up and be financially sound even in less than ideal situations. When kids learn to manage money they learn a skill that well serve them very well for the rest of their lives.

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