Why
it is Important to Teach Children About Money
Older children
often benefit by being given allowances for expenses such
as clothes, movies and college savings so that they develop
an understanding of how to budget their money and how to save
part of their income towards long term goals. If teens
on an allowance buy too many CDs one month, then they may
have to cut back on new clothes, or may not have enough money
to be able to go to the movies with friends on the weekend.
Allowances give
children and teenagers practice at managing money and making
wise spending choices when the risks are small. For example,
a teen who spent too much money on clothes may have to spend
a Saturday night watching a DVD with Mom and Dad because he
doesn't have any money left to go to a concert with his friends.
This is a lot less painful way to learn about making wise
spending choices than might happen as an adult when the stakes
are higher. A young adult who living on his own who spends
too much money on clothes and doesn't have any money left
over may have to face having his phone service and electricity
shut off.
Children who learn
good money management at an early age have a head start at
understanding how to budget for necessities such as food and
rent and save for long terms goals
like a new car or a house. Giving teenagers unlimited access
to charge cards and providing frequent parent funded loans
may seem like a good idea at the time, but unfortunately it
does not prepare children to manage their own finances well
later on in life.
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