Tips for Parents: Spending Mistakes Help Teach Kids Money Management
MANHATTAN, Kan. -- Helping children understand the difference between wants and needs is an essential part of teaching them to be responsible money managers -- and consumers, said Carol Young, Kansas State University Research and Extension financial management specialist.
Preschoolers hear marketing messages every day, and parents are encouraged to talk to their child without scolding or belaboring a point, to help him or her separate wants from needs and learn about money, including saving and spending, Young said.
In doing so, parents can encourage an early interest in saving to meet needs and pay for an occasional extra, she said.
Parents also are encouraged to model money management, such as paying bills on time, saving regularly, building an emergency fund, using coupons, comparison shopping, and allowing each family member some discretionary money, such as an allowance.
Why an allowance? Providing an allowance allows children to share in family resources, while also learning -- and practicing -- money management, said Young, who encourages parents to let children make spending mistakes.
A child who has his or her eye on a hot new toy often will be eager to save for the toy, but may be disappointed after buying it, and this is where the lesson comes in, Young said. Though disappointed, he or she will usually be more cautious about spending in the future.
Making spending mistakes early often can prevent more costly mistakes later in life, said Young, who noted that K-State Research and Extension has free money-management teaching resources available for parents at Extension offices, and online at www.ksre.ksu.edu/financialmanagement/, which includes a link to Federal Reserve Bank of Kansas City youth resources.
A free booklet titled: "Great Minds Think: A Kid's Guide to Money," is available from the Federal Reserve Bank of Cleveland at http://www.clevelandfed.org/Learning_Center/Online_Activities/great_minds_think or by calling 1-216-579-3188.
K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.
Story by: Nancy Petersonnancyp@ksu.eduK-State Research & Extension News
Carol Young is at 785-532-1943