7 Key Ways to Teach Children the Basics of Accounting
Accounting is one of the skills in life that all adults need, but many were under-prepared for, as it’s not always taught to the extent that it should be. Many of today’s parents and grandparents learned how to balance a checkbook in school, or budget for theoretical grocery trips and utility bills, before having to face those tasks in the real world.
Today, many schools have abandoned teaching these skills altogether, so it’s up to parents to teach children the basics of accounting and prepare them for adulthood. Follow these easy tips to gift your child the skill and knowledge of accounting.
1. Moderate Your Child’s Allowance
Instead of giving your child a fixed weekly allowance, consider offering them pay for small tasks and chores beyond the usual you expect of them throughout the week. This will encourage them to keep track of how much they’ve earned and will lay the foundation for basic accounting.
2. Teaching Children How to Balance a Checkbook
Even though most of us don’t use paper checkbooks today, it’s a good idea to show a child how to balance a checkbook so they can get an understanding of how bank accounts work. They should be taught about delays between purchases and withdrawals, and how to know how much money should be in a checking account without having to wait on pending transactions to clear.
3. Allow Your Child to Spend Their Own Money
It can be tempting to cover the costs of everything your child asks for, especially when they’re buying an inexpensive toy or clothing that you don’t mind paying for directly. This can be a good opportunity, however, to allow your child to spend their own allowance or chore money, so they can get a better understanding of how the flow of money works and how to save for larger expenses.
4. Teaching Accounting as a Concept and Career
If your child or young adult has shown excellence or interest in the practice of accounting, it might be a good idea to introduce them to accounting as a career.
While personal accounting skills are important for every adult to develop, business and organizational accounting can be a great field for young people to enter, if they excel at math, record keeping, or organizing. Many accounting schools and universities offer online courses and test preparation that may interest young people.
5. Sign Up for a Spending Card for Your Child
With debit cards being so ubiquitous now, it’s a good idea to sign up for a card that your child can use on their own. Not only will this help you track their purchases, but it will also give them a way to look back on their past purchase history more easily, and learn for themselves which items were worth buying or not. Many banks have spending card programs for children, but remember to monitor your child’s purchases closely, so they don’t overspend.
6. Teaching Your Child about Interest
You may discover your child has an entrepreneurial spirit once you begin teaching them about earning interest on savings. This often sparks some inspiration in children with a natural skill for business and growing wealth. Allow them to open a savings account and watch as their money passively earns interest. This can also teach financial patience and can help save for larger purchases like a first car.
7. Teach Your Child about Record Keeping for Accounting
One of the most important ways to teach children the basics of accounting is to show them how to keep financial records. This can be done with a paper cashier’s journal, or by using a simple spreadsheet on the computer or smartphone. Teach your child to track all purchases, and to keep records of their expenses and income. It’s a good idea to have them look back at their records each month to spot spending patterns and identify financial errors.