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By: Dr. Caron B. Goode, www.acpi.biz
We all know that money cannot buy
happiness. Nor is it the root of all evil. Learning how to
manage money, however, is important to ensuring a sense of
security and self-worth. No matter whether your child wants to
be a stockbroker or a school teacher, learning how to manage
money gives them the key to financial success. A success that
comes from knowing she has the skills and the knowledge
necessary to take care of herself.
Six Steps To Teaching Money
Management
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Introduce Money. Young children take pride in
learning how to count. You can use this skill to introduce
them to the concept of money. Gather pennies, nickels,
dimes, quarters, and one, five, ten, and twenty dollar
bills. Show your child how money adds up by putting coins
and bills in groups. Show her that five pennies equal a
nickel, five nickels equal a quarter, four quarters equal a
dollar, and so on. Also, play lesser and more than games.
Ask your child which is more, a one dollar bill or a five
dollar bill? Then ask which is worth more a five dollar bill
or a ten dollar bill? Eventually, your child will begin to
comprehend the concept of money in terms of numbers.
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Practice Spending. Once your child is familiar with
the concept of money and worth, put that knowledge to the
test. On a trip to the store, pick out an item and show your
child the price. Ask her how many dollars and coins she
would need to buy the item? Over time, she will be able to
equate numbers with money and money with purchases.
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Allowance. When your child understands money and its
purpose, then it is time to start making her financial
lessons more concrete. Decide on an appropriate allowance
for her age. Also decide what you expect for that amount. It
is important children learn that money is earned, so age
appropriate chores should be part of receiving a weekly
allowance. So should consequences for not completing those
chores. No chores, no allowance. This will help motivate
your child. It will also introduce her to a good work ethic
and give her an opportunity to feel good about herself.
Everyone is proud of a job well done.
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Saving. It is not enough to give your child an
allowance. You need to show her how to manage her money,
starting with saving. Explain to your child there are two
kinds of saving. There is saving for something you want now
and there is saving for what you will want in the future.
Tell her that both types are important and need to be
planned for. You should decide how much of her allowance she
puts into short and long term savings. More than likely, she
will easily grasp the concept of saving for a toy she wants.
Saving for the future might be a more difficult point to
drive home. This might be accomplished with storytelling or
make believe. Ask her questions about what she wants when
she grows up. Ask her if she wants to go to college, drive a
car, or buy a house. Then explain that all these things are
big expenses and if she starts saving for them now, she will
be able to have them when she wants them later. Don’t worry
if she does not seem to comprehend this at first. Just get
her in the practice of saving. Eventually, with maturity,
she will understand and by that time she will be well on her
way to saving for her future.
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Sharing. When children are young, it is hard for them
to think about helping people they don’t know. But like
saving for the future, in time they will understand the
importance of charity. Like saving, it will be up to you to
determine how much of her allowance should set aside for
charitable causes or donations. Help her pick out which
causes are important to her and explain how her money can
help.
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Open a Savings Account. Many of you may have already
done this for your child. If not, now is the time. Take your
child to the bank with you when you open the account. Let
her take part in the process, and after you are done,
celebrate with a small treat. Let her know she is taking an
important step, and set up regular times during the month
for you to go to the bank together. After she makes a
deposit, let her look at her bank book. Let her see on paper
how her money is growing and she is reaching her goals.
Dr. Caron B.
Goode is the founder of the Academy for Coaching Parents
International, a training and certification program for parent
coaches. In addition to duties with the academy, Goode is the
founding editor of the website InspiredParenting.net, and
the author of eleven books, the most recent of which is Help
Kids Cope with Stress & Trauma, which includes several
chapters on he use of storytelling strategies. For more
information on The Academy for Coaching Parents International or
to sign up for academy announcements, visit
www.acpi.biz .
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