It is never too early to start teaching your children about money management. Research has shown that there has been a decrease in understanding finances and how to manage money in America’s youth. Teaching your children how to manage their money leads them to becoming financially responsible adults. Below are 5 money management tips you can use to teach financial literacy in your home.

1. Use Cash – Whether you’re grocery shopping or at the movie theater with your children, it is probably much more convenient to pull out your debit or credit card and swipe it. But, as you’re swiping your card, your kids are watching you. Using the plastic card does not allow them to actually see the exchange of money for your purchases. Instead, use cash. The kids will be able to see the transaction take place, and visualize the exchange of cash for goods and services. It will also teach the lesson of handing over hard-earned cash.
2. Utilize a Piggy Bank System – Or better yet, a clear jar. Using a system like this allows them to see how much money they save over a period of time. It may be a long standing tradition –but it can give them inspiration to keep adding to it in order to reach their savings goal!
3. Distinguish the Difference Between Needs vs. Wants – Do you want it or do you really need it? It’s essential to teach the difference between needs vs. wants. Knowing the difference between needs vs. wants is essential when teaching good money management skills. This will help kids develop a foundation for appropriately managing their money, along with learning to appreciate saving money for items they want.
4. Don’t Give Allowances – Instead of giving your kids money just for breathing, give them commissions. Base it on whatever chores they do around the house, such as taking out the trash, cleaning their room, dusting or putting the dishes away. The idea here is to help understand that money is earned — not just given to them!
5. Use a Money App – With the use of technology increasing every day, your kids probably have a phone, tablet or some electronic device. Whichever one it may be, consider downloading a budgeting app for them. Save! The Game can help kids easily identify their spending habits in addition to organizing their finances accordingly.

Teaching your kids money management can be one of the most valuable life lessons they can learn — start sooner rather than later! You can start by setting an example. Demonstrate good money management because it’s most likely that they will absorb what is going on around them. And with these helpful tips, we hope your kids learn the basics in order to be successful in the future!

Peoples Bank & Trust Co.

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