Connecticut Moneuy: Boost your kids' money skills

This article was published in the New Haven Register on May 7, 2020.

Among the many things you want to teach your children, one of the most important is how to handle money. It’s not a subject they’ll encounter in school, so letting them develop spending habits with little or no input from you is a roll of the dice.

Children learn different things at different ages, but there are strategies that apply to both youngsters and early teens. The first step is to be a good role model — do you and your spouse display a positive attitude toward savings and investment?

If you help your kids gain a proper understanding of financial matters, they will be better prepared as young adults to handle obtaining a mortgage, saving for retirement, purchasing insurance and other financial responsibilities. Here are some strategies to help your kids develop good money management habits:

Show them how money can grow. For very young children such as preschoolers, set aside a clear jar where they can save a little money. A jar is better than a piggy bank, because the child can see the jar fill up. For older children, open a youth account at a bank or credit union so they can absorb the basics of savings and interest.

Talk about needs vs. wants. With a younger child, discuss the difference between buying a toy and buying shoes. With older children, talk about the difference between buying a video game console and a new coat.

Place them in charge. Studies have shown that children who manage their own money develop better habits than those who don’t. Of course, you should exercise oversight, but set things up so that your child gets to make choices. For example, if your child wants to make an impulse buy, don’t forbid it, but ask them to wait a day before making the purchase, to give them time to think it over.

Require a savings account. Here is an exception to allowing your kids to make choices: You must require that they set aside a certain percentage of their allowance money in a savings account. Talk to them about taxes, insurance, charity and other financial matters that will require them to put aside money and exercise discipline in the future.

Treat them as individuals. Some kids do well with a basic allowance, while others need the discipline of tying allowance money to performing chores. If the latter, be sure to withhold money if they don’t actually do their chores.

Teach them the true cost of spending. Discuss the concept of “opportunity cost” with your children: They need to understand that buying something today means giving up the opportunity to buy something else tomorrow. Here’s a great way to do this: Save the receipts for everything they buy, and periodically review them with your child. Ask them if each purchase turned out to be worth it and talk about what they could do if they still had all the money they spent.

Get help. You can find several sites online that offer lessons on money management for children of all ages. One example: “Fun Links for Kids” at the website for the Center for Economic & Financial Education,

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