Ohio State University Extension Fact Sheet

Family and Consumer Sciences

Campbell Hall 1787 Neil Avenue, Columbus, Ohio 43210

Kids and Cash

HYG-5216-96

Children are not born with money sense; money management must be learned. Because children's attitudes and values about money are influenced by what they see, hear, and learn at home, parents need to set a good example. In addition, children learn by their experiences using money.

Most young people today will earn over one million dollars in their lifetimes. Happiness and security depend on their abilities to manage these earnings. Parents have an opportunity and obligation to help their children gain knowledge and skills in managing money wisely.

Guide and advise rather than direct and dictate. An adult-child discussion may be far more effective than a parental lecture.
Encourage rather than criticize and allow children to learn by their mistakes as well as successes.
Show children how to make spending plans and keep accounts. Set a good example.
Set reasonable limits and be consistent. Children find comfort in rules that they understand and believe to be fair. Parents should feel comfortable in saying "no," however, and sticking with that decision when necessary.
Be objective about the purpose of money -- do not use it for rewards or punishment.
Include all family members in decision making and family money management activities.
Establish specific guidelines for school-aged youth who are employed. Guidelines should include hours allowed to work, spending/saving of income, and school performance.

Kids and Cash

The following chart will help you understand how children learn about money.

Age Group	Activities to Teach about Money
Pre-Schoolers
This age has difficulty understanding concepts such as time and value. They may think a nickel is more valuable than a dime because of the size. Using credit cards and checks may confuse them. They have an understanding about buying things but little understanding of limited money resources.	Count and sort coins. When shopping, give child two or three items from which to choose. Let child pay for small items at store. Use stories, books, and games to teach about money. Check the children's department at your local library.
Elementary School Aged Children
This age is eager to learn but attention span is short. Making choices is difficult. Money means more to them but they may be careless with it. They are beginning to develop an awareness of the relationship between today's decisions and tomorrow's results.	Play store or operate lemonade stand. Let children earn money for specific jobs around the home over and above regular chores. Point out opportunities for children to share (church, charities, etc.). Save for small items to buy within a week or two. Read stories or books about money.
Preteens
This age is looking to peers for approval. They may want to spend freely, especially to be accepted in a group. Self-esteem may correlate to items they have or can buy.	Help preteen develop positive traits through other interests and skills not related to money. Set goals for money and set up a spending plan. Open a savings account. Allow preteen to make own decisions for some money.
Teens
These years are full of turmoil and inner conflict. Teens desire freedom yet need security. They may reject money management principles that they formerly used. Often teen's opinions are in conflict with parent's ideas. Teens want independence and freedom to make their own choices.	Let teens earn money from summer neighborhood jobs. Encourage long-range savings for vacations, camps, gifts, etc. Encourage comparison shopping for items. Teens want to get the most for their money. Encourage teens to join Junior Achievement programs, take 4-H money management projects, or be involved in other learning activities. Let teens be involved in family discussions about money as well as write checks to pay family bills.
Older Teens-Young Adults
Many older teens or young adults have living expenses paid for by parents. If they have a job, they often spend earnings on luxuries. This type of economic power has been called "premature affluence," which will come to a shocking end when they are out on their own and must pay their own living expenses.	Encourage older teens or young adults to explore the cost of setting up own apartment. Encourage them to shop for best interest for savings as well as understand cost of credit. Encourage young adults to set financial goals, improve shopping skills, learn how to make a consumer complaint, and understand investments.

Prepared by

Barbara J. Gilbert, CFCS
OSU Extension Agent
Family & Consumer Sciences
Lorain County

Nancy W. Hudson, CFCS
OSU Extension Agent
Family & Consumer Sciences
Medina County

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status.

Keith L. Smith, Associate Vice President for Ag. Adm. and Director, OSU Extension.

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