All posts by Lynne L. Finch

“It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children to manage money as a number starting with kids as young as pre-school and continuing through high school.

Kids can learn money skills before age 7

KidsCountingMoneyCambridge University agrees–children can learn money skills before the age of seven. A young child can see what happens at the cash register, even before learning to count, make change, or knowing how to calculate compound interest.

Parents are the most effective teachers in those precious years where behavior experts say that children shape many of the money habits they will carry into adulthood. The study  recognizes the power of parents to help kids develop good money management skills starting at home.

My two-year-old begged to learn about money when I started giving our five-year-old an allowance. I thought she was too young and challenged her to count to 100, the number of pennies in a dollar. Part of my plan was to have my kids learn to count using coins, an activity that turned out to be very popular with the little tykes. So started my money lessons for my pre-school children that included having them exchange coins for a dollar and deciding on their own how to spend their small allowance.

Like all kids, mine wanted money. Why? Because money gets stuff. Kids want money so they can buy their own stuff.

Of course, there is more to money than spending, but with young children when it’s “all about me” the activity of spending for self is the starting point. Having money is a big deal to a three-year-old. Going shopping and making decisions about using money is even more exciting.

Parents play a big role in helping a child learn five important concepts before age seven.

  1. Money buys stuff.
  2. You have to have enough money to buy something.
  3. People work to earn money.
  4. Money can be cash or something that represents cash.
  5. It’s okay to “not spend” so there is more money to buy something later.

Note to parents: For kids, the act of “not spending” is a form of saving. Because the child makes the decision to defer spending he is motivated by a result he expects in the future, e.g. a toy that costs more than he has today.

These years are a great time for you to show and tell as it relates to the world of money. You start by showing your child money in the form of cash and doing the activities in my book. The No-Cash Allowance. As your child learns about cash you tell how money works by explaining what you are doing when you use cash and cash substitutes (check, debit card, credit card, electronic fund transfer).

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school through high school.

Why are teens so carefree with money?

Ever wonder why teens are so carefree with money? It’s because children think about money in a different context than adults. This is partly because kids are kids and partly because parents are haven’t discovered the power of using a no-cash allowance to teach kids Allowances are a powerful money management skills.

In our society, kids are not required to earn money; someone gives it to them. Kids don’t have to pay bills; parents take care of them. To kids, money is a treat, sometimes received regularly, sometimes not.

Most adults have to earn their money so an adult looks at money knowing that it usually has to pay for choices made in the past, as in, “Can I make the full mortgage payment this month and buy groceries?”

On the other hand, kids get money from parents and relatives so, to a kid, their money is for the future as in, “What will I buy at the mall today?

There’s nothing horribly wrong with this picture. As parents, we enjoy seeing our children have fun and nothing says “fun” like having money to spend. The reality is that kids and adults view money differently because they get it from different sources and have different motivations for how they spend it.

However, when we casually dole out money to our kids, while at the same time taking care of their financial necessities, we enable them to develop freewheeling attitudes about money. In doing so, we are not preparing them for the reality they will face as adults, where they have to work and make decisions about paying their bills before they can go the mall to spend for fun.

Let’s consider getting a driver’s license. We can agree that getting behind the steering wheel is the fun activity that our kids relate with driving. However, as parents we know our kids need to learn the rules and practice the skills of driving. If not, we fear they could have an accident.

We also unconsciously know that through practice making good driving decisions our kids will begin to understand and appreciate the responsibility of having a driver’s license.

Learning to manage money also requires practice to develop skills. Without practice using money for more than just fun spending our children will not change their attitudes about money before they become adults.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school through high school