Previously, I mentioned Yahoo Finance’s latest feature on teaching children about money. This post continues with that feature.
Lynne Ticknor acknowledges that schools often don’t have the resources to teach classes beyond core curriculum. Personal finance classes are therefore difficult to find in public schools. Thus, the responsibility falls on the parents, who as many would argue are ultimately responsible for the education of their children to a point.
From the article:
One point on which all of the experts agree is that parents must be willing to allow children to make mistakes in their purchasing decisions if they want to teach financial responsibility. It’s much better to let children make, and learn from, those mistakes early with small amounts of money than later in life when they can find themselves in serious financial trouble.
The point is to give the children some control over their money, whether the source of the funds is a gift or allowance. The article offers suggestions for various age groups.
* 3 Years and Younger. They can receive an allowance and begin to understand that money has value and should be kept safe.
* Ages 4 to 5. At this age you can begin to teach your kids about delayed gratification — that it may be better to have two later than one now.
* Ages 6 to 8. The difference between “wants” and “needs” becomes apparent during this development stage. This lesson can be related to the advertising the kids will likely see on television.
* Ages 9 to 12. Children of this age will have a sense of social responsibility. Parents can talk to their kids about the value of charitable donations.
* Ages 13 to 18. During this time, children will be able to handle more responsibility and should be encouraged to learn how to wisely use money-management strategies, including responsible use of a credit or debit card, monitored by the parents.
The article is full of good tips for parents, but it’s important to note that the age groupings above are a very generalized guide. Different children develop differently and at different times. Perhaps it would help all parents to understand Piaget’s stages of cognitive development.
Updated February 6, 2012 and originally published October 25, 2005.