Child Development

Fewer people are saving money, credit card debt continues to rise, and the number of bankruptcies remains staggeringly high. This has experts clamoring to create and institute education programs in public schools, but you don’t need to leave financial education to the experts. You can start at home right now with your children by using the guidelines below.

Start Young

According to Lewis Mandell, a leading scholar in the financial education movement, children learn best about money when they are between the ages of 8 and 12. This means you may be missing a window of opportunity if you assume that your children will learn what they need to know in a high school personal finance class. Mandell suggests looking for opportunities at home to weave money lessons into everyday activities. For example, get children involved in making a family budget, or have them help pay the bills. Don’t try to create an in-depth lesson, cautions Mandell, or your children will simply tune out what you’re saying.

Make It a Habit

A recent study indicates that college-aged students with good financial skills all have one thing in common—their parents emphasized the importance of saving money, but more importantly, helped them to make saving money a habit. According to economics professor Angela Lyons, this study indicates that learning to save has more to do with experience than with simply having knowledge. To encourage the savings habit, try asking children to save a portion of any money they receive for baby-sitting jobs, mowing lawns, allowance, or gifts. For very young children, glass jars work well so that they can visualize how much they are saving. You may even wish to match any funds your children sock away to further encourage the savings habit.

Connect Savings to Goals

Even adults can have a difficult time making savings a regular part of their budget when there’s no clear plan for where the money will be spent. However, when you connect savings with goals, all this changes. The same can be said for children. When you talk with your children about what they want to do with their money, a savings account becomes more than just a household requirement. It becomes a means of helping them achieve what they desire. Young children can cut out or hand-draw a picture of what they wish to buy and paste it on a glass jar. Whenever they make a “deposit”, you can discuss how much closer they are to reaching their goal. Older children can put their goals into writing, even carrying them on an index card in their purse or wallet. Studies show that putting goals into writing is one of the most effective ways of getting what you desire.