If your child runs through their allowance every week, spending it all on games, toys or other things then its time to start teaching children money management skills. Think they’re too young? Not true. The earlier you begin teaching them the better. Developing a good savings habit is something that will help them throughout their lifetime.

Once they see that saving is not hard and something that is within reach, it’ll be a habit that will be easy to add to their weekly routine. That said, here are some simple, tips for teaching children money management skills.

teaching children money management maria antoinette tmablog

Let them earn money

The first step in teaching children money management skills is to let them earn money. Explain to them that money is earned and not given. You can do this by giving them chores around the house. Create a chore board or dice to determine what their chores will be and for every one completed they will earn a set amount of money. This will help them understand responsibility, as well as get them excited to be earning money.  

Create a budget

Sit down with them and talk about creating a budget. Explain to them where the money goes as a household, as they might not even be sure. Then walk them through their daily activities so they can understand how they spent their money. From there you help them create a budget. The key to a kid-friendly budget is remembering it’s not punishing or restrictive. Let your children know there is still plenty of room for fun things, but they simply can’t have everything they want all the time.

Put money aside weekly

A great tip to help teach kids to save up for items they want is to put aside $3-5 (or whatever amount works best), every week until they have enough to buy the item that they want. That way, by saving bit by bit, they can reach their goal.

For older children, they should be saving a minimum of 20% of their allowance or their work pay for long term goals. Let your child pick whatever those long-term goals are, so they feel the most motivated. It could be for their first car, to help pay for college or a group trip with friends the choice is theirs.

Show them how money works

Talking to your children about how money works is one thing. You need to show them how money works when it comes to things they want to buy. Plan a trip to the store and take the money they’ve earned with you. Let them choose something they want to buy. Talk to them about how much the item they want costs versus how much money they have and once at the register show them how you pay. This will show them at an early age how money works when it comes to something they want to buy.

Give them a bill to pay

Money management is more than saving money to spend it on hobbies. Children, especially if they’re older, need to know as an adult they will also have to save money to pay bills. For your teenage children who have jobs, you can assign them a bill they must pay each month. This could be their cell phone, the internet, or even a portion of the grocery bill. Failure to pay means they pay a late fee penalty. This will prepare them for when they move out and have bills of their own.   

Make saving money fun

For younger children, you can make learning fun by incorporating arts and crafts. Kids like to see how things come together. When I first started talking to my son about the importance of saving we did it while making his very own DIY cash cow. He was excited to make something that would hold the coins he earned from his chores around the house. Talk to your children about what kind of piggy bank they would like to create to hold their earnings.

Do you have any tips for teaching children money management skills? Share them with me in the comments below. Don’t forget to tag me in your cash cow DIY’s on social using #TMABlog.

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Maria Antionette is a professional hairstylist, DIY creator and fashion lover with a belief that beauty can be fun, easy and simple.
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