Parenting Article- Money Management for Kids

To keep track of your child's money, first get some containers. Two to four. Plastic food containers or cleaned out cottage cheese containers work well. Your child will be putting their money in these containers.

• One container will be for Things I Want Now. Such as a video game rental. Snacks from vending machines. Candy from a candy store. A comic book.
• The second is for Things To Save For. Such as a computer game. Bike. Toy.
• The third can be for Gifts. This will enable your child to save for holiday presents and gifts for Mother's Day, Father's Day, and their sister's birthday.
• The fourth container can be for Charity. You can match this money with your own if you desire. Have your child pick an organization they feel is worthwhile, like the Red Cross or the Humane Society. Or they can give money to their local veterinarian for any pet owners who do not have enough money to help their sick pet.

Now label the containers. You can write on masking tape. Tape labels on lid or side of container. The side is better if you plan to stack containers.

You might be asking yourself how should the money be split up? This is how you can do it: Let us say your child gets two dollars a week for doing chores. (Note: I do not believe in giving free allowance to kids. They will never truly know the value of a dollar until they have to earn it.) Talk to your child about how they want to divvy up their allowance. Maybe seventy-five cents can go to Spend Now. Fifty-cents to Save For. Fifty -cents for Gifts. And twenty-five cents for Charity. Down the line some kids might take from one container and put it into another container. If this happens do not freak out. #1, they are kids. #2, it is their money which they have earned. But if you see this happening you should point out they will not have money for gifts and charity later if they keep on taking from Spend Now. Some kids might not care. Some kids might say they will give back to their charity and gifts containers next month. Wait to see if they do. If they do not, this blasé attitude about where money goes could blow over when they are older, or it might mean they will end up as individuals who take from Paul to pay Peter. If so, you can console yourself by knowing you tried to teach them money management when they were younger. But do help an older child by showing them how to organize their money. Give them a little handheld notebook. Have them write down how much money is in each container. Every time they take money out they are to deduct it. They should have a sum total of how much is in each container. If your child goes along with this money management system, they will have pocket money for gifts, have saved for a bike/computer, and have still enjoyed the little things in life like candy and a comic book.

Reasons to open a savings account for your child:

1. For kids who want to save money but find it too temping to have containers around with money they can not spend right away. Since banks do not separate your money into sections for Gifts, Charity, and Save For, do it yourself. Once again give your child a small notebook and have them write down deposits and withdrawals.
2. Having a savings account teaches your child about saving. You don't your want your child to spend, spend, spend and never save for a rainy day.

Here's another idea. You can talk to your child's teacher about having Money Awareness Month. The idea behind this is to teach kids how to budget properly. Some schools do this in the fifth grade. Each student is given a fake credit card, plus pretend money (from their pretend job). They are given money every week for four weeks. Once a week students go around classrooms pretending to buy groceries, shoes, household gadgets and other such items from other students. Kids are shown pictures of clothes, food, gifts… and asked, "Would you like this?" If they say yes, fake cash is taken or a credit card slip is written up. Students also must use their pretend money to pay for rent, utilities, car insurance, and car loans. After a month it comes down to could they balance their budget? Could they pay off their credit card bill? Or did they get themselves in debt? This is a fun way to learn about money management.