Make a Resolution to Teach Kids Money Management Skills

by ExGen on November 18, 2007


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Resolutions are usually a New Year’s tradition, but resolving to help a child develop good financial habits is a worthy commitment any time of the year.

“We all know the importance of literacy in the lives of our children,” says Gil Llanas, director of the Northwestern Mutual Foundation. “We spend hours reading books with them, but how many of us realize that our children need to be literate about money matters, too?”

TheMint.org is a Web site that makes learning about money management a fun experience for children grades six to 12. The site is a partnership between the Northwestern Mutual Foundation and the National Council for Economic Education (NCEE), and offers a variety of information, games and activities illustrating the ABC’s of personal finance.

A 2006 Jump$tart Coalition study showed that high school seniors receive a failing grade in financial literacy, yet only a small percentage of schools offer such classes. “Therefore, this all-important task lies with a parent,” says Llanas, “and every day is the right day to make financial literacy a reality for your child.”

A Parent’s Roadmap

Where to begin? For parents, there are two key ways to help their children understand responsible money management:

* Create conversations about money. Parents should create conversations about money with their children — not lectures, but casual remarks and observations on situations that arise in the normal course of the day. Topics could include why money is valuable, where it comes from, where it goes, what happens when you borrow it, the importance of a “rainy day fund,” what it means to invest or how to live on a budget.

* Model responsible behavior. Parents should also review their own financial habits to be sure they’re modeling responsible behavior. It’s no secret that children quietly observe adults — we’re teaching financial behavior all the time, whether we mean to or not.

Covering All the Angles

Financial headlines are all about the stock market, millionaires and blue-chip companies, so it can be difficult to know where to start when talking about finance with a child. Helping a child, at any age, discover how to manage money should start with the basics:

* Saving: This is easy for some, harder for others. Some tricks to saving more money include paying yourself first, linking saving to expenses, keeping a money diary, cutting expenses and being a smart shopper.

* Spending: This is where being a smart shopper pays off, especially since spending comes easy to all of us. Good spenders are careful with money and make smart decisions — making the money they have go farther.

* Investing: Smart savers put some of their money in investments, where it will earn more than in a savings account. Investments are money set aside for the long-term — years in the future.

* Giving: Teaching children to “share” their money demonstrates an understanding of others that are less fortunate, and that those of us who “have” things should help those who “have less” than we do.

* Tracking: Money can slip through one’s fingers easily. Determining and sticking to a budget is important. So it’s a good idea to keep track of money that’s coming in (income) and going out (expenses).

About TheMint.org

TheMint.org features information, games, calculators and activities for kids, parents and teachers to help bring financial literacy to life. Most sections are written in a kid-friendly style so families can work together — or older children can work independently in learning money lessons. However, some sections have been developed exclusively for teachers and parents. New to the site in 2008 are short, interactive polls allowing users to weigh in on current financial literacy topics affecting Americans.

Courtesy ARAcontent

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