By KATHY SMITH
August is here and it is time to begin thinking about going back-to-school. With many things that are needed to buy, this is a good time for kids to learn about money management.
Families spend time buying new clothes, shoes, book bags and school supplies. Then when school begins there are expenses that include school lunches, after-school snacks, and fees for activities including clubs, band, sports and many other expenses. All these expenses can provide opportunities for parent to talk to their children how use money wisely.
Parents can begin teaching their kids money management skills by looking at where their kids get their money. This is usually through cash gifts, earnings from jobs and allowances.
Cash gifts received from birthdays or other special occasions are surprise money that shouldn’t be included as a part of day-to-day expense money. Children should be given freedom to spend it as they wish. However, parents can discuss with children ideas for how they can use their money.
Earnings can from jobs and/or household chores. This amount can be received for various tasks and should be agreed upon by the parents and the child.
When children are old enough to work outside the home, they still need guidance in money management. Teens should begin developing longer-term financial goals and an adult awareness of money, work, time and their own needs.
An allowance is a child’s share to the family income and should be used as the child chooses on certain defined expenses. With an allowance children can have hands-on experience with managing money. They can plan their spending and learn to save money to be used for future needs. Allowances can help children learn that money is limited, that income must first cover needs and that the family’s financial situation affects the amount of money each member can use. An allowance should be enough to cover necessary expenses, as well as some discretionary money for the child to spend as he or she chooses.
When starting an allowance, parents should teach children how to set up a spending plan, keep records and set money aside for savings. It is important to gear the information toward the age and ability of the child.
Parents can then teach their children the value of a dollar by providing them a list of supplies they have to buy and a budget. Decide on how much they have to spend and then do research and comparison shopping using advertisements, newspaper inserts and in store research. You can help your children out by shopping with them and allowing them to be invested in the process.
Some of the best lessons learned occur when they over budget and they don’t have enough money. Then comes, what are they going to do without and what changes will they have to make?
Additional lessons can be gained by teaching the older children to balance the checking account and paying bills. These can all be ways to help your children be better at money management.
Source: Missouri State Cooperative Extension and Texas A&M AgriLife Extension