Teaching Your Tween About Money Management
by Jan Udlock
As your child reaches the “tween” years (10-12), it’s a great time to begin an in-depth conversation about money and financial responsibility. Tweens are maturing and have stronger opinions than younger children, so it’s a great time for parents to begin thinking about how to include their children in family discussions about finance.
Budget
You can review your family budget and general expenses with your child. He or she will then be able to see how having a budget allows you and your family to prioritize your spending.
“When discussing a budget, explain to your tween that your needs have to be taken care of first, and, if you have money left over, then you can buy some of those things that you want,” says Danny Kofke, author of A Simple Book of Financial Wisdom: Teach Yourself (and Your Kids) How to Live Wealthy with Little Money.
There are plenty of types of online budgeting software and money games you can check out with your tween. After you fill in the necessary amounts online, the budget software produces a pie chart or graph illustrating your individualized family budget. A picture of your budget is a valuable learning tool, because your child can see your expenses and where the family is spending money plainly illustrated.
Making lists for all of your purchases, such as your weekly groceries, new clothes, or back-to-school items can help your family stay within budget and thwart impulse buying.
“Before buying something, get in the practice of stepping back and thinking about it first,” says Kevin Gallegos, VP of Phoenix Operations, Freedom Debt Relief, LLC.
Savings
Your actions speak louder than words, which means that your kids will probably pick up your financial habits no matter what else you try to teach them. It’s hard to save money when each paycheck is being stretched as far as possible, but you teach healthy money skills when you show your child that you are choosing to save. In addition, hard decisions often create important family discussions that benefit everyone.
Allowance
All families do things differently when it comes to allowances. Some families attach allowances to the completion of household chores. Some families don’t give allowances. Some families give their children allowances as a matter of course, as part of being a member of the family.
Your child can also earn money outside of the home via small jobs like babysitting, yard work, shoveling snow, or taking care of neighbors’ pets while they are away on vacation.
Let Kids Make Mistakes
It’s hard to let your child make mistakes, but it’s very helpful to let him or her make some financial choices and live with the consequences of the decision. In the long run, the effects are harmless, and educational as well. It also shows your child that you trust him or her to make good choices.
“As parents, we’re embarrassed by our past financial mistakes, but we should tell our children that we [can] learn from these mistakes and change our ways so we don’t repeat them,” says Kofket.
Credit Cards
Your tween is old enough to understand the concept of interest and how it works. Explain the difference between a debit card and credit card. Show your child that if he or she buys a $200 electronic gadget on a credit card with an interest rate of 14-20%, interest will accrue on the unpaid balance, which means that if the bill isn’t paid quickly, it can end up costing $28 to $40 more than the shelf price in the long term.
You can also show your child how many credit cards offers you get every week in the mail. Remind your child that banks are businesses too, and ask him or her why banks might want people to have credit cards. Your tween should be able to make the connection between the interest charged on credit card purchases and a bank’s profits.
Cash Cards
There are differing opinions as to whether a tween should carry a debit card. The card can be connected to the child’s savings account, and banks often have safeguards on minors’ cards that parents can use to control spending.
One benefit of cash cards is familiarizing the child with the concept that there has to be money in an account for the card to work. This offers practical experience with the consequences of spending money.
Cell Phones
Prepaid cell phones are a effective tool for teaching kids about limited resources, since they offer a specific amount of minutes for a specific number of days. When the minutes are gone, the privilege of a phone is gone.
“Kids this age often aren’t able to exercise a great deal of self-control, so the cut-off can send the message while giving them a handle on which to set limits,” says Gallegos.
If you have a family phone plan, you can show your child the telephone bill, which usually breaks down the user details on each phone in the plan.
“Parents can set an age (e.g., 16) when they expect the child to pay his share of the cell phone bill, or any minutes that go ‘over’ the budgeted amount,” Gallegos suggests.
More Opportunities
You can look for other opportunities to talk about money and choices with your kids throughout the week. Money and financial decisions can be sensitive subjects, but it’s important to take an active role in teaching your children good money management to help them prepare for their futures.
Online Budget Software and Money Games
- US Mint, a site for kids with money info and games
- T. Rowe Price & Disney ‘s online finance game for kids
- Sheppard Software also offers a fine online money game
- Practical Money Skills, an online game for tweens
- Mint.com also offers free online budget software geared towards kids
- Orange Kids Planet, a free money learning site
About the Author
Jan Udlock is a freelance writer and mom of five. She blogs at IMP3RfeCt Mom.
