Young people need all the help they can get to survive economically. One of the most important lessons of all is how to make money work. Good money management skills, when taught clearly and by good example, can set a person on a solid road to the future. Here are some helpful tips to support that worthwhile endeavor.
Talk about money management often. Discuss with your child not only what you’re doing with money at home, but why you do it that way. Let them see you make financial decisions, and even contribute their thoughts to the process. Tell them why you purchase off-brand items in some instances but not in others, and the financial implications of that decision. The earlier they perceive the work that goes into making decisions and living with the consequences will help them avoid serious pitfalls when they get older. For example, explain why you chose to use the debit transaction rather than the credit. You might say, “Using this as a debit card works like an electronic check where they take the funds out of checking right away. If I selected credit, I would have to pay for it at the end of the month… and there may not be enough money then.”
Use their allowance to teach, not just to reward. Before you give a child his or her allowance, consider having them set some goals on what they will do with the money. In addition, help them set up a way to track their goal. Talk about trade-offs between spending it all on candy at the store and saving some for their target purchase or savings. Experts recommend that you think twice about giving a child more money if he or she runs out before the next allowance disbursement. Remember how important it was for you to learn impulse control and savings discipline—and try to give your child the advantage of learning that early!
Teach youth to avoid knee-jerk purchasing. There are a lot of scam artists out there and bad guys intent on stealing what financial assets you (and your children) have. So teach children to be skeptical of unsolicited sales pitches, especially through the internet and social media. “Special offers” are rarely the great deal they say they are. Teach your children to analyze advertisements and avoid being sucked in to spending their precious money recklessly.
There are, of course, many other aspects of learned money management skills. The FDIC has an effective and well-written financial teaching resource for teachers, parents, grandparents and other concerned parties. Their Consumer News provides overall guidance, and even groups additional suggestions by the age of the student. It will help you assist young people in establishing a good financial foundation for their life. You can download a PDF with all of their great tips and resources or just browse to the most interesting section. Take some time to check it out. There is great information on this site!