Teaching Children About Money Management

One method to teaching children about responsibility and money management is through a system of daily chores and weekly allowance. A banking system is also used.

It is never too early to start teaching children about responsibilities and money management. At age five- or younger- a child can be responsible for very simple daily chores around the home. These chores can be such tasks as emptying small garbage pails from rooms; feeding and providing water for a pet; or making his/her bed. Whatever the chores are be sure they are reasonable for your child to accomplish.

Next, decide upon a daily allowance your child will receive when the chores have been completed. Once this has been established, make a chore chart showing a list of the chores with pictures cut from a magazine to visually dispaly each chore. Young children who cannot yet read will be able to identify the chores by looking at the pictures. This gives the child a sense of responsibility by being expected to know what they are to do on their own. At the top of the chart you will need to make a slot for each day of the week so you can put your child's daily allowance in it. This can be done by cutting a small envelope in half and taping or gluing it to the construction paper used to make the chart. After your child completes all of his/her chores for each day, place the daily allowance in the envelope slot. If you will be using coins each day, you may want to use small plastic sandwhich bags in place of the envelope so that your child can see his/her money each day.

At the end of the week, collect all the money and have your child divide it in three ways: for the future, for self , and for giving. Illustrate these concepts by using three small boxes or coffee cans. Decorate each one according to what it will represent. The future box/can will represent savings for the future - such as long-term goals like a car, college, graduation, etc. Cover it with pictures representing his/her future goals.

The self box/can is for anything that your child may want to buy which is not in your budget for him/her. That should also be decorated according to current interestes. Finally, explain to your

child about the importance of charity. Talk about who your child can help with that money or what gifts they can buy for someone in need. The third box/can should be decorated to reflect the many ways to give to others.

At the end of each week, your child will divide the money up into the three boxes/cans. Once money has accumulated take your child to the bank and have him/her actually deposit money into his/her savings account. Allow your child to use his/her self money wisely, and suggest ways your child can spend his/her charity money.

As your child ages, begin talking about taxes and what they mean. Show them what taxes are used for by bringing them around your neighborhood and city, pointing out how your tax money is used and how it benefits your community. By the age of 10, you should be able to start deducting a tax percentage -5-10% may be an appropriate range. In April present your child with a check which represents his/her tax return. A more in-depth system can be developed as the child matures and ages but this is a good starting place.

Once the preliminary work is done in setting up this system, the rest is up to your child to follow through. With parental guidance this method will help your child become a responsible adult and will help him/her gain money management skills which will last a lifetime.

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