Money Management Tips for Kids

Debt is a concern for many families, making it important to establish healthy money-management habits at a young age. Many kids don't realize how money and budgeting works. Teach them about budgeting, saving for the future and planning for large purchases to set them on the path to making smart financial decisions as adults.

Allowance Budget

Help your kids create an allowance budget. Designate a certain percentage of each week's allowance for different budget areas. For example, 60 percent of each allowance goes to savings, 20 percent goes to a gift fund and 20 percent is fun money to spend as the child wishes. Assist your child in determining the breakdown of his budget and make suggestions as to the amount for each area. Provide a container to hold the money for each part of the budget.

Big Purchases

Help your child plan for big purchases she wishes to make. Help her assess the amount of money she has available to put toward the purchase and how much more she needs. Determine how much of her allowance can be put toward the fund for the purchase. Create a tracking sheet that she can update each time she puts money toward the large-purchase savings. Seeing the progress may encourage her to continue saving and finding other ways to earn extra money.

Board Games

Play board games with kids that involve money. Use games such as Monopoly, Life and Payday so kids get the chance to handle money. These games require your child to make decisions involving money that could help or hurt them later in the game. These games also give kids the chance to practice counting money and learn about loans.

Family Budget

Include the kids in the family budget as much as possible. Discuss with them where the money goes so they gain an appreciation for money. Discuss the decision-making process when you are considering a large purchase for the family.

Shopping Assistance

Have your child assist you with the grocery shopping. Ask your child to help in clipping coupons and finding sales in grocery ads. Create a shopping list together based on the weekly budget for groceries. Have your child help you locate the items on the list at the store and keep a running total of the amount of money spent.

Visual Reminder

Provide the kids with a clear container for storing their money. The clear container allows the kids to watch their money increase while monitoring the savings. They will also see the amount of money physically decrease when the use some of it to make a purchase. Use the visual reminder to encourage saving their money.

Source: eHow