The Power of the Piggy Bank | Important Life Skills Teaching About Money Management

In a society ridden with plastic, credit cards that is, it is so important that children begin to learn the value of money. Not to mention that there are some adults that still don’t really know the value of money. With that being said, teaching your child the importance of money management starts at home. Whether they are a part of helping you create your weekly shopping list to cutting out coupons from the Sunday paper, it is important that they be included in the process so they can fully understand that money does not grow on trees

The dreaded “B” word

It goes without being said that no one really likes to have to stick to a budget. It would be wonderful if money was ever flowing and those limitations did not need to be imposed on our spending. For a child, it is even harder to understand why we can’t just drop everything and run to the local toy store to buy the $50.00 toy they just saw on a commercial. Teaching your child why we budget and why it is so essential is important. Helping them learn impulse control and patience will go a long way. The fact is everyone has to wait at some point in time. We have to wait on long lines to get our morning coffee. Our children may have to wait for their turn on the slide at the playground. It is just part of our everyday lives.

The mighty power of the piggy bank

Giving your child an allowance or having them earn money at home doing chores is a great first step in teaching them money management. They can choose to either save their money or watch the piggy bank fill up with more money, or they can choose to spend it quickly and get a smaller something with it. Not only are they learning great problem solving skills but they are also learning the value of money. The next step with a piggy bank is teaching them that they don’t always have to spend the money to buy themselves something. They can choose to “pay it forward” and buy something for someone else. Teaching them that is a rewarding thing to give rather than receive will not only boost their self-esteem but they are learning to give to others and build empathy.

Their turn at the check out

It can be very intimidating for anyone to know on the spot how much cash to pay for a purchase. It is not uncommon for people to want to give the largest bill they have and hope it will cover the total amount. Another issue they may have is not knowing how much change they will receive in return. These skills can be taught and reinforced by allowing your child to begin to pay with cash at the store. It is so important they experience cash handling so they can begin to learn the value of money. Even though not all children will have difficulty understanding the concept of cash handling, it is important to start at home where they will receive support.

Using their smartphone as a tool to learn

In today’s society more and more young people are connected and learning though tablets and smartphones. Several low-cost or no cost apps are available that let children and teens work through virtual experiences with managing finances and experiencing real-life situations such as budgeting and spending.

Related: Tech Tips for Money Fun

Mint is a versatile app that helps young people with the art of budgeting. Monthly budgets with appropriate categories can be set up, monitored and adjusted as needed. Planning for purchases and analyzing spending patterns are just some of the benefits to this app. Mint is available for everyone and it is free to sign up.

Savings Spree helps young people make smarter choices with financial decisions. The format is in the style of a game show where the activities are interactive. Users go through the various levels learning how to save, budget and make smart spending choices. The graphics are somewhat juvenile, but the lessons make the process fun. Although it is not a free app it does the cost is minimal ($5.99).

The Game of Life app is also a wonderful and classic tool for teaching about decision-making. Young people are introduced to the real-life decisions that they may need to make in the future such as education, raising a family, getting into and out of debt. Understanding the responsibilities and the ultimate consequences of making decisions gives them an opportunity

Money Trail and Allowance Manager are two online systems to help you and your child manage their allowance and spending. Money Trail allows you to set up a free account to help you and your child keep track of how much money they are spending and saving. Allowance Manager, touted by Forbes, is an excellent tool to assist your child with the ability to understand and manage real-time financial decisions. There are several variations to Allowance Manager including the ability to monitor spending, but the opportunity to set up a debit card controls. For more information, check out www.mymoney, www.nerdwallet.com and www.moneytrail.net.

Gina Frisina, Michelle Ranaldo and Erin Vlasak are all administrators and instructors at the NYIT Vocational Independence Program.

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This post originally appeared on our January/February 2015 Magazine