Thursday, June 7, 2012

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Ongoing Money Management Lessons for Children Help them Avoid Costly Mistakes

I am glad to offer you this guest post from another homeschool mom and freelance writer:

It doesn’t seem to matter whether your children go to public school, private school or are homeschooled – financial lessons and money management are lessons our children need to learn before they need to make financial decisions.  Money management strategies cannot be taught during a one time lesson; instead, children need age-appropriate information throughout their childhood so they have time to form sound financial habits that carry over into their adult years, and are armed and ready with the information they need to make good financial decisions.

Elementary Age Kids and Finances

My own children are ages 6 and 9.  My 6-year old seems to think if we need money for something, we need only visit the bank or ATM and ask for it; while my 9-year old understands you have to have the money in the bank to withdraw it, but doesn’t quite understand why we
need to save money to pay for things like our home or groceries.  If we have money today, we should spend it today, according to his understanding of finances!  When I realized how little they understand about money, I decided it was time to add financial literacy to our homeschool curriculum.

I’ve started talking more about our banking practices, sharing with the kids when a deposit is made and what it will be used for.  We talk about saving a percentage of all income, donating a percentage, and some very basic information about budgeting just so they begin having exposure to the concepts.  When the kids receive money as gifts or for doing extra chores at their grandparents’ house, they have the opportunity to save a percentage in their own bank accounts, and to designate what they’ll do with the rest.  I think it’s important that they see how much things they want cost – so they can realize how much work goes into earning the money and make better decisions about whether to buy certain items or not.  Sometimes, realizing something costs $80 when they only have $15 is enough to help them decide they don’t even want that item as much as they thought!  

They’ve already discovered they can save some of their “spending money” until they have enough to buy something that costs more than they have available immediately – and I’m hoping this financial lesson stays with them as adults to help them avoid going into debt.

Middle and High School Kids and Finances

As kids get older, their ability to understand economics and finances tends to improve.   Many have a little more experience with money, as they’ve had more time to earn money and more opportunities to decide what to do with it.  If you’re interested in using a game to your curriculum, Cashflow for Kids is a board game and computer game that will help kids advance from basic savings and spending concepts into more advanced topics like investing and financial portfolios.  Dave Ramsey also offers a full video-based course for high school students on budgeting, managing and growing wealth, insurance, avoiding debt, and learning the advantages of renting or owning a home.

Financial Lessons Can Help Children Avoid Learning from Mistakes

Most adults learn how to manage their finances simply by making mistakes and learning from them.  How many people do you know, maybe yourself included, who has gotten in over their heads in debt and had to learn how to make and stick to a budget to get their heads above water?  If children begin learning financial concepts when they are young, and continue to receive age-appropriate money management lessons as they get older, they will be much better prepared as adults to avoid making the costly financial mistakes many of us make.

Debbie Dragon is a financial writer for, a site that helps consumers compare savings accounts, CD rates, and home equity loans to make informed banking decisions and save money.



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