How to help children learn to manage money responsibly

By Lindsay Hornell, B.S.W, B.A., and Emily Koeppel, B.A.
Graduate Research Assistants in Human Development & Family Studies,
Colorado State University

Teach children about money

Managing money responsibly can be one of the biggest challenges adults face. Therefore, it is important to teach children strategies for managing money responsibly beginning at a young age. There are several ways that grandparents can help their grandchildren learn how to manage money at any age.

If you have young grandchildren, introduce your grandchildren to money as soon as they can count. Count coins and dollar bills with them to help them learn the different values. Additionally, go with your young grandchildren to pick out a piggy bank. If they find spare change, or get a visit from the tooth-fairy, teach them to use the piggy bank to save their money. Make sure to explain the benefits of saving and how money can add up over time. Using piggy banks and spare change is an easy way to introduce the idea of saving money.

If you have school-aged grandchildren, try giving them an allowance. Set age appropriate tasks for your grandchildren to do. When they have completed the task, give them a small allowance. This helps teach grandchildren the value of hard work, as well as teach them that money does not magically appear. Additionally, give your grandchildren their allowance in smaller denominations in order to encourage them to save. For example, if your grandchildren's allowance is five dollars, instead of giving them a five-dollar bill, give them five one-dollar bills. Then, explain that if they saved one of their dollar bills a week, they would have fifty-two dollars at the end of the year.

Also, with school-aged grandchildren, try looking for helpful bank apps, such as Bankaroo, that can teach how to manage money. Bank apps can be used on cell phones or tablets. These apps can help encourage children to track their allowance, their spending habits, and learn good saving habits. Finally, if your school-aged grandchild wants to save for something in particular, make a sticker chart. Stickers can represent how much money has been saved for the item. Then, as your grandchild saves money, he or she can learn how rewarding saving money can be.

If you have teenaged grandchildren, try taking them to the bank to open their own bank account. This will help them learn how to be responsible and understand the process of banking. If your teenaged grandchildren have jobs, encourage them to set up a direct deposit for their pay-checks. This way, their money goes directly into the bank where they are less likely to spend it immediately. With teenagers, it is also important to teach the difference between debit and credit cards. That way, when they are old enough to have their own credit card, they know how to use it responsibly.

No matter the age of your grandchildren, you should always try to bring them on shopping trips with you. While grocery shopping with your grandchildren, explain to them the difference in unit prices, have them help you decide what the best deal on an item is, and explain how buying more of something can actually save money. Before heading to the store, have your grandchildren help you cut out coupons and explain the benefit of sales and coupons. Additionally, it can be a good idea to give your grandchildren a fixed amount of money for them to do all of their holiday shopping. Encourage them to pay attention to sales, and make sure they are allotting enough money to buy all of the presents that they need to buy for their family. Giving grandchildren a set amount of money to spend on presents will help them learn how to budget the money that they have.

One of the most important things you can do to teach your grandchildren about managing money responsibly is to have conversations with them about money. Talk about the difference between needs, wants, and wishes. Also, try saving as a family for something fun like a trip or a visit to the zoo. This is a great way to show children money management and an easy way to introduce financial topics with your grandchildren.