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Teaching kids about money makes sense

By Keri Lewis
MSU Ag Communications

MISSISSIPPI STATE – Summer jobs, lemonade stands and family vacations make summer the perfect time to talk about money matters, and free resources can help parents and children make sense of a complex issue.

Children are more likely to learn the money lessons they will need as adults when parents use real-life situations, said Sheri Worthy, professor in Mississippi State University’s School of Human Sciences.

“Openly communicate with your kids about money, be a role model and do activities together to show kids that family finances are important to everyone,” Worthy said. “It has become the American way to buy now and pay later, but this debt cycle can be avoided when parents educate themselves and their children about key money concepts.”

Research shows that young people value information about money when it has an immediate relevance to their lives, Worthy said. During the summer, teens with jobs may need help decoding paycheck deductions. Spending money on a family vacation or staying at home because finances are tight can also serve as opportunities to talk about the financial decisions that impact all family members.

Susan Cosgrove, Extension family resource management area agent in Newton County, said teens want to learn how to manage money and prefer to learn this from their parents rather than from friends, a book or a class in school. Yet only one in five parents involves his or her children in financial planning and decisions to give them hands-on experience, according to a 2008 survey by Charles Schwab.

“I believe many parents avoid talking to their kids about money because they are not confident they have adequate knowledge to do so or because they have made mistakes in managing money themselves,” Cosgrove said. “Research shows that parents, specifically moms, wish they were more informed about managing money so they could pass the knowledge along to their kids.”

Financial literacy tools for all ages, including helpful guides for parents, are available online. For example, “How to Raise a Money Smart Child” is available at It offers age-specific ideas for each family member.

“A good starting place is teaching children the difference between needs and wants,” Worthy said. “Make a list with your child of what you could not live without, and watch the debate unfold. Or decide together on a family savings goal, whether it’s an unusual treat or a major purchase. Agree on how each member is going to contribute to the fund, and watch the money accumulate in a glass jar.

“This will help children learn the idea of saving up for an important purchase rather than putting it on a credit card and then paying more for it because of interest,” she said.

Children are keen observers, so self-awareness is important when it comes to parents being good money role models.

“Your choices convey your money values,” Worthy said. “Whether it’s sticking to a budget, impulse shopping, using coupons or shopping for entertainment rather than for buying what you need, your children are learning from your example.”

Talking about money can seem stressful, but websites with fun games and videos offer interactive ways to introduce tough topics. For parents interested in learning more about financial literacy, free publications are available at the local county Extension office or visit the Family Financial Management section.


Released: July 7, 2011
Contact: Dr. Sheri Worthy, (662) 325-3462, or Susan Cosgrove, (601) 635-7011

Released: July 7, 2011
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