Parents should help kids learn to manage money

July 04, 2003|by LYNN F. LITTLE

Your children's attitude toward money will be shaped by nature. They inherit from your ideas, and you nurture them. They pick up ideas along the way. Despite peer pressure, it's likely they'll end up the carbon copy of you. So, before you try to mold them, think about picturing yourself as they see you. Children adopt a financial culture by watching and listening to their parents and older siblings.

The most basic money concept is that resources are scarce. We do not have enough resources to satisfy all our wants and needs. Therefore, compromises and choices must be made. The way that we make these choices is learned from our families, friends and personal experiences.

Parents and children need to talk about their needs, wants and goals. Family members have different values. These needs must be shared in the family. Talk about your concerns and listen to the needs of others. After the concerns have been shared, the family can make decisions that reflect the interests of each family member. Every family has special goals and values, so financial management is unique to each family.


One way to teach your child about money is an allowance. When is payday? Children, as well as adults, want to know. An allowance can give children a sense of security. It can teach them good skills in using money.

Children, like adults, need the security of a regular income. Some parents dole out money on an as-needed basis. This may deny their children the chance to learn about saving and spending money. Most parents are amazed at how much money they give to their children in small amounts. Parents giving money when asked tends to teach children that money is available in infinite amounts.

The allowance lets children choose how to spend their money. Parents can help their children in developing good spending habits. Children as young as age 5 or 6 can learn about money with an allowance. At that time, set rules on how the allowance can be used. Be sure the child knows these rules and when he or she will receive the allowance.

When an allowance is given, there should be no strings attached. Do not withhold money as punishment for failing to do chores. Keep the allowance separate from household duties. Children realize that helping around the house is part of belonging to a family. Children who are rewarded for doing household chores may never learn the duty involved in family living. Also, a child should not be paid for routine behaviors like brushing teeth, going to bed on time or for bringing home good grades. Offer support and praise for a job well-done.

Consider that the allowance should teach children how to use money to make wise decisions. Parents have a responsibility to guide children as they make decisions. It will help children learn how to save or spend their allowances.

Lynn F. Little is family and consumer sciences educator for the Maryland Cooperative Extension in Washington County.

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