Money

According to Wikipedia, money is any object that is generally accepted as payment for goods and services and repayment of debts. In the U.S., most currency in use is as follows:

• Coins
  • Penny
  • Nickel
  • Dime
  • Quarter
  • Fifty Cents  (or half dollar)
• Bills
  • One Dollar
  • Two Dollars (rarely seen now)
  • Five Dollars
  • Ten Dollars
  • Twenty Dollars
  • Fifty Dollars
  • One Hundred Dollars

Money Management

The act or practice of handling one’s personal finances. Money management involves budgeting, having enough money to pay bills, spending for entertainment, saving money for emergencies, making investments, paying taxes, and other uses of money. People will manage their money differently depending on their age, needs, priorities, size of family, risk taking perspective, knowledge of money management best practices, and more.

Money Management Knowledge Areas

Money management and personal finance are very large topics. In terms of what we are trying to accomplish at Cognitra, we hope to focus on the following main areas briefly described below:

Earning Money

• An allowance
• Bonus money for extra chores
• Gifts
• Jobs
• Business start up

Saving Money

• Goal is to save 30% every week – 10% for emergencies, 10% for short-term goals, 10% for long-term goals
• Stick with a game plan
• Incentives are usually needed for a child to save money
• Limit impulse buying

Sharing Money

• Goal is to share 10% every week
• Sharing money can be allocated for gifts and charity
• Should be considered before spending money

Spending Money

• Don’t confuse needs with wants
• Delaying instant gratification is key
• Managing expectations

Investing Money

• If debt free and money saved, it is time for investing
• All investments have risk – should diversify
• Stocks, bonds, mutual funds, ETF’s, and more.

Loaning Money

• If debt free, money saved, and money is available for investing, then loaning money may be appropriate
• The money may never be paid back, so risk of losing entire loan amount must be considered
• Help people learn how to manage their money by loaning them money

Money Management Learning Goal

It’s crazy when you think about it. Kids today learn so little about money and how best to manage it, yet they will need to use money nearly every day of their adult life. And there are more financial choices now than ever before (e.g., debit card) making successful money management even more difficult to understand and master. 

In fact, some adults and experts believe that teaching kids money management should be just like any other learning opportunity for kids. If we teach kids how to get dressed, brush their teeth, and comb their hair, why don’t we teach them how to manage money? In reality, money management isn’t really all that different. It is a basic skill that is needed for life. So, parents and other caring adults should be introducing good money habits early on. Teaching teenagers or young adults about money management when they are experiencing financial problems is too late. You owe it to the children in your life – help them learn about personal finance and money management now when they’re young - and when penalties for making mistakes are minor.

References

1. Clark Smart Parents, Clark Smart Kids (Howard, 2005)

2. Kids and Money (Searls, 1996)

3. Money for Teens (Shelly, 2001)

4. Money Doesn’t Grow on Trees (Godfrey, 2006)

5. Raising Money Smart Kids (Bodnar, 2005)