Rising student loan debt among young people has underscored the current need to teach children money management skills at a young age. Conscientious parents are exploring educational options for children of all ages that can help them to learn basic money management skills that will help them to succeed in the real world.
Even children as young as five years old can participate in businesslike activities that can help them learn how to budget finances. The proverbial lemonade stand, for instance, is an age-old tradition among young entrepreneurs who want to earn a bit of spending cash.
Although lemonade stands are no longer commonly seen gracing residential street corners, the basic economic principle remains the same. Providing goods and/or services to a willing market in a way that produces a profit is the basic premise of capitalism and one of the first economic lessons that every young person should learn.
Other ways for young people to earn money is to set up a small business performing yard chores for neighborhood residents such as cutting grass, raking leaves and snow removal. Young people with a special aptitude such as math, languages or working with computers can go into business for themselves as professional tutors. Babysitting is another option.
Easy-to-understand budgeting software exists that can help children learn the basics of balancing a ledger. Plenty of books have been written on the subject as well, and for younger children, games are available that can help them begin to get a grasp on what money is and how it works.
Children over a certain age who do not wish to start their own businesses can always get part-time jobs during the summer and after school and use the money earned to develop financial management skills. No matter how the income is derived, the young person should be encouraged to open both a checking and a savings account. It should not stop there, however.
Because plastic is such a big part of the way modern adult consumers choose to handle their finances, children should have the opportunity to learn to respect plastic. Many adults are in disadvantageous financial situations because they didn't quite view plastic as real money, and it became something that was easy for them to spend but difficult to repay.
As mentioned earlier, using a prepaid card is kind of like putting training wheels on a bicycle. Because only money that the card contains can be used for purchases, it is impossible for those using these cards to fall into debt. These cards are easily obtained and are even carried in some grocery stores. They can be bought in a variety of amounts, so even small children with limited budgets can find one to suit their needs.
By learning the value of work, developing budgeting skills and realizing the importance of treating plastic like the real money that it is, the upcoming generation will hopefully not fall prey to the same sorts of fiscal mistakes that have plagued proceeding generations.