Volume 7, Number 3
Back-to-School Shopping Good Time to Teach Children About Money
Family Financial Education Specialist
University of Missouri Extension
Many families are getting busy buying new clothes,
shoes, book bags and school supplies.
Then when school starts, there will be more expenses: school
lunches, after-school snacks, fees for extracurricular activities –
the list goes on and on.
“Since these expenses are related to children, this is a great time
to begin helping them learn to handle money,” said Janet LaFon,
family financial education specialist, University of Missouri
Extension. “From a very early age, children start using money, so
why not help them learn to use it wisely?”
Start by taking a look at where children get their money. Usually
this is from one of three general sources: cash gifts, earnings and
According to LaFon, each of these can be used to teach children
money management skills.
Earnings and Gifts
Cash gifts, often received on birthdays and holidays, are “surprise”
money and shouldn’t be included as a part of day-to-day expense
“Children should be given leeway to spend it as they
wish. However, parents can discuss with children ideas for how the
money can be used,” said LaFon.
Earnings may be at home or from jobs outside of the home. Many
children are paid money for extra work they do around the house. The
amount received for various tasks should be agreed upon by the
parents and the child.
“When children are old enough to work outside the home, they still
need guidance in money management. Teens should begin developing
longer-term financial plans and an adult awareness of money, work,
time and their own needs,” said LaFon.
An allowance is a child’s share of family income and should be used
as the child chooses on certain defined expenses. With an allowance,
children can have some hands-on experience with managing money.
“They can plan their spending and learn to set some money aside for
future use. Allowances can help children learn that money is
limited, that income must first cover needs and that the family’s
financial situation affects the amount of money each member can
use,” said LaFon.
An allowance should be enough to cover
necessary expenses, leaving some money for the child to spend as he
or she chooses.
When starting an allowance, parents should teach children how to set
up a budget or spending plan, keep records and set money aside for
savings. LaFon says to be sure and gear the information to the age
and ability of each child.