April is Financial Literacy Month and we are excited to improve your children’s money management skills.

Research shows that young people in America lack understanding of proper money management skills. Teaching children how to properly manage their finances is essential so that they have the necessary tools to become financially responsible adults. Here are tips to help teach kids about proper money management.

Use cash: It may be true that credit and debit cards are more convenient to use, but children pay attention to how adults manage their money. The use of plastic does not allow them to see the real exchange of money for purchases. Let the children see that to make a purchase, you must hand over cash.

Don’t spend the money as soon as you get it – always lead by example. Before you go shopping, always create a budget, explain what you plan to buy, and compare the prices of each item. Teach children that all their purchases are worth planning before they buy.

Teach kids about the importance of an assignment – Most assignments are tied to household chores like making the bed, doing the dishes, or taking out the trash. It is always beneficial to give them the opportunity to earn extra money for larger tasks. Regardless of how you choose to distribute your allowance, it is also important to emphasize that saving and sharing are just as important as spending. Teach children to keep money in their piggy banks or to use a bank account to reserve part of their allowance.

Bank and ATM Visits: Visiting your local bank or ATM is a great way to explain where the money comes from. Explain that banks not only give money, but are a place to keep the money they have earned. Call and arrange a tour of the branch with your local credit union to show how money is stored and distributed.

Delayed gratification: Teaching children that good things come to those who wait will help fight the buy now, pay later attitude. Always reinforce the idea that waiting is worth it. This approach could help them avoid credit card debt in the future.

Brands Do Not Always Mean Better: Emphasize that it is not always beneficial to shop by brands. At the grocery store, illustrate that generic products can save significant amounts of money for people on a budget.

Keep Track of Your Money – Show kids the importance of knowing where their money is going. Ask them to keep track of their money in a notebook or on the computer. You can even make a file where they can organize their store receipts and bank statements.

Wants vs. Needs: At the core of any good money management program is the ability to differentiate between wants and needs. This understanding will help lay the foundation for managing finances in adulthood.

Create a Budget – Have your child sit down with you and create a monthly budget. Explain the reasons to keep track of all monthly expenses and then see how much money is left to save or make the purchase they want rather than need.

Create a Wish List – It’s hard for everyone to have priorities, so sit down with your kids and make a wish list of everything they want to do with your money. It will help you sort the items on the list by importance.

Games and Other Budgeting Activities – Games like Monopoly, Life, and Easy Money are great ways for parents to practice money management skills with their children. Look online for other fun ideas and activities to promote children’s financial literacy.

Make the most of your savings: Introduce your child to different savings accounts that could earn interest, such as CDs, bonds, or regular savings accounts. Work with an interest calculator to show them how their money can grow over time with basic monthly interest. I’m sure you will be surprised.

Good money management is a life skill that you can teach your children, especially when they are young. Using yourself as an example is very important as they become involved in what is going on around them. Make sure your lessons are age appropriate in an effort to lay a solid foundation for good money management skills as they grow into young adults.