Teaching Children About Money

1
Teaching Children About Money Budgeting

• Casey Clements
• Zhen Li
• Kathleen Skarda

2
Importance of Teaching Children Money Budgeting

• Everyone needs to understand about money
• Literally, America is a nation of consumers with
  savings and debt out of balance
• Cannot afford to raise another generation of
  spenders
• Teens lack money know-how
• Help children managing money and dealing with
  risk and return
• Reduce stress and increase satisfaction with life
• Set kids well on their path to financial freedom
• Children can enjoy life-long benefits from good
  money habits

3
Kids Spent 57 Billion in 1992

• The average child is exposed to more than 500
  television advertisements per week.
• Results in distorted values and a free spending
  attitude.
• Junk food, designer labels, and fad items that
  were "to die for."
• The good news is that children tend to mimic
  their parents' thrift habits.

4
Model the Behavior

• The primary way young children learn is by
  following parents examples
• Involve children with family budgeting
• Review your financial plans with them
• You cant spend what you dont have
• Cookie jar principle
• Save money
• Rule of 72 (delayed gratification)

5
Help Them Budget

• Earmarked for several budgeting categories
• spending
• short-term savings
• long-term savings
• charity

6
Actual Experience

• My name is Katelynn
• Penny, nickel, dime, quarter, dollar
• I love money!
• (Expressions of excitement)

7
Learn for Themselves

• Advice is helpful but the true teacher is the
  pain of an unwise purchase.

8
Allowances

• There's a strong argument that an allowance is
  the best way to teach children to handle
  financial responsibility. There's an equally
  convincing case that nothing could be further
  from the truth.

9
Give an allowance

• Can help teach a child to save, budget and spend
  responsibly
• A child can make mistakes and learn from them
  before the stakes are high.
• Teach negotiation skills
• Can be used as a tool for motivation and reward

10
When and How Much?

• At least old enough to count and understand
  currency basics 5 or 6 years
• Age appropriate
• How often?
• Chores based
• Grades based
• Family membership based

11
Performance based allowance The problems

• "For that amount of money, I'm not going to do
  that work."
• Grades do not always reflect effort

12
Arguments Against Allowance

• Children will not automatically learn good
  saving and spending patterns by simply receiving
  an allowance.

13
Dont Give an Allowance

• Giving money hinders financial independence and
  resourcefulness
• Children should help because they are members of
  the family, not because they get paid
• Can establish parents as the primary source of
  financial funds

14
When does the allowance stop?

• High School Graduation?
• 18 years?
• Leave home?
• College Graduation?
• Marriage?
• Never?

15
Alternative methods

• Encourage child entrepreneurship
• Children learn by example
• Involve children in family budgeting and
  financial decision making where appropriate.