Union Bank's Resource Library—Easy-to-Teach Money Management

When your children receive birthday money or their allowance, do they spend it all on bubble gum and yo-yos, or do they save it for a more expensive item they want? Habits established when young are hard to shake; therefore, teaching your children sound money management skills early can get them started on the right path. For each age, there are appropriate ways to learn money skills. In general, involve your children in discussions about money and create an environment where they can ask questions.

Preschool Children
Because young children don't understand abstract ideas, use concrete techniques to introduce money concepts.

• Have children pay for an item at a store to show that money is exchanged for goods.
• Encourage saving by giving your child a fun piggy bank, like one that plays music when a coin is deposited.
• Decorate separate envelopes or boxes for spending and saving money. Parents can hold onto the savings for safekeeping.
  

Elementary-Age Children
Children are excited to learn, so use everyday situations to teach money management lessons.

• Open a savings account for your child. Then explain how banks and interest work.
• If you start giving your children an allowance, consider requiring that they save a portion.
• Make it a big deal when children reach their savings goals.
• Play board games that show how money is exchanged for goods and services, such as The Game of Life¨ (Milton Bradley), Pay Day¨ (Parker Brothers) and Monopoly¨ (Parker Brothers).
  

Teens
During this stage, children may get their first jobs, and can handle more responsibility.

• It is important for children to master the pay-as-you-go technique, before managing credit. For example, give them a seasonal clothing allowance. It's up to them if they buy one name brand T-shirt or three off-brand.
  
  
• With their first jobs, teens should open a checking account with a debit card as an interim step to learning how to manage credit.
  
  
• Suggest paychecks/allowance be deposited into a savings account first. Then transfer to checking only the money needed for expenses.
• Reexamine who pays for what. Decide if an allowance will continue if the child has a job.
  
  

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