Whether your youngster already dreams of a future career in accounting or you'd just like to teach her a little about good money management, you can help her understand some basics in finance and apply those lessons to concepts of saving and spending. By the time you're finished, your child will be ready for budgeting and bookkeeping and she may even be able to help you balance your own budget.
1. Dollars and Cents
Before your youngster is ready to balance her checkbook, she’ll have to learn to recognize money and its denominations. You can make or purchase a set of flashcards with pictures and monetary values written beneath and play board games with toy money. You can introduce her to real money, but talk about the importance of washing her hands after handling the coins and bills. You can use imaginary play to help your child learn about money. Transform an area of the playroom into a pretend supermarket or store with shelves full of empty food boxes and toy food. Use small pieces of paper to attach prices to each item, make or purchase play money for your child and go shopping.
2. Budgeting Basics
Once your child can recognize money, help her learn how to put her chore and birthday money to good use to learn the basics of budgeting -- an important part of accounting. You can use your own family's budget as an introductory guide by comparing monthly bills to the amount of money coming into the household, or use a fake household budget if you prefer. Help your child keep track of her own income from chores and gifts, recording when she receives money, where it is spent and how much is left over at the end of the month. Talk about her savings goals and help her create a budget to save for new toys, clothes or even a little gift for Mother’s Day.
3. Bank It
Help your child learn about the basics of banking and check-writing to become familiar with some aspects of accounting. Start with pretend play at home; design your own generic deposit slips and help her fill them out. Create your own blank checks, too, and show her how to fill them out, writing pretend checks to family and friends, and reconciling the checkbook with a bank statement every month. Once both of you are comfortable, you can open up a bank account for your child, reminding her how to fill out deposit slips when she brings her allowance to the bank and showing her how to monitor her spending with her monthly bank statements.
4. Money In, Money Out
Use an imaginary toy store business to help your child understand the workings of debit (money in) and credit (money out.) Start with a large sheet of poster board and divide the sheet into two columns -- one for debit and one for credit. Present your child with a variety of scenarios and help her learn to decipher the difference between money in and money out. For example, several customers make purchases at the store today, the rent bill is due or it's time to pay the employees. You can use a tally point system to keep track of the items in each column or take the activity a step further and use dollar amounts for each one. Have your child add up the debits and credits for the month and talk about the income earned or money lost when you’re finished. When you feel she’s ready, you can help your child learn and earn together with her first lemonade stand.
- The MoneySmart Family System: Teaching Financial Independence to Children of Every Age; Steve Economides, et al.
- Money Doesn't Grow On Trees: A Parent's Guide to Raising Financially Responsible Children; Neale S. Godfrey, et al.
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