Teaching Kids Money Management

In Savings & Loans – a story about saving (and paying) for college in our August issue – we found that not only are kids today often expected to contribute to their college expenses, but many families begin teaching them the importance of saving long before they graduate high school. A survey conducted recently by Money Management International (MMI), the nation’s largest nonprofit credit counseling agency, supports our finding, revealing that kids today are being exposed to financial education far more often than their parents were as children. According to the MMI report, “nearly five times as many parents did not learn about money until they were adults compared to their kids.” “It’s never too early to start teaching the next generation the financial skills they need for life” says Cate Williams, vice president of financial literacy for MMI. “Being exposed to financial education at a young age prepares youth to have financially successful futures.” Key findings from MMI’s 2010 Kids and Money survey include: Kids are starting to bank younger these days. Three times as many children under 10 have bank accounts than their parents did when they were that age. Piggy bank popularity is increasing. Nearly twice as many parents use the piggy bank as a learning tool for their kids compared to how many used it themselves as kids. Kids are learning how to raise money. Nearly 7 in 10 American kids participate in fundraisers for their school or organization. Parents are using these fundraisers as an opportunity to teach financial lessons – two-thirds of parents teach financial responsibility or basic math skills, roughly half of parents surveyed teach goal setting or basic business skills, and 4 in 10 use fundraisers to teach about budgeting or charitable giving. Some kids have control over their money, others don’t. When it comes to controlling the money kids receive, parents are roughly evenly split on who gets to control their children’s money – 49 percent say that they either give their children the total decision or most of the decision while 51 percent of parents say they give kids pretty free rein or put their money directly into savings. Kids mostly spend their money on wants. Almost half (49 percent) of parents report that their children primarily spend their money on things they want, such as ice cream, video games, etc. Twenty-seven percent of parents say that kids save their money. Nearly 20 percent said their children spend their money on things they need, like new clothing, school supplies, etc. Have you started teaching your kids about money management? What’s worked for your family? What have you tried that might not have worked as well? For tips on teaching kids good money management skills, check out the resources on MoneyManagement.org . For tips on saving for college, no matter how old your kids are today, read Savings & Loans in our August issue .

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Teaching Kids Money Management