Did you know children as young as 3, can begin to understand how money works, including how important it is to save for a favorite toy? And, by the age of 7, most kids have already formed their basic money habits. Are your children savers, spenders, or, like many other kids, simply unaware of money’s importance?
It’s okay. Teaching children about the proper use of money is not as challenging as teaching times tables or getting them to read three chapters in a book. Rather, it’s about teaching them the basics and then continuing to encourage the right decisions throughout each day. These steps can help you to achieve these goals.
#1: Set the Example
Parents who have savings accounts and pay their bills on time are good examples for children. When your child asks questions about the mail, bills, or why you go to work, speak to them about the importance of these items. Open the conversation about money whenever it comes up. It’s important to talk to kids about money, including:
- Why it is important to save
- How you save money
- How to make wise decisions about whether to buy something
- Why it is important to give to those in need
- How you make money
#2: Set Up a Jar System
For young children, it’s important to create a visual way of saving money since the concept of a savings account isn’t always clear. Here, establish three jars. One is for Savings, one for Spending, and one for Charity. When your young child receives money, help them separate those funds into each jar. Encourage them to save for a specific item so they can see the value of money.
#3: Provide an Allowance
Don’t provide your children with an allowance just to give them money. Instead, set up an allowance based on specific tasks. Choose age-appropriate chores or tasks for your child to complete each day. At the end of the week, they’ve earned a specific amount of money for those activities. Chart their activities and accomplishments throughout the week; it’s important to keep their savings visual, so they can see how their money comes and goes.
#4: Don’t Forget Your High School Kids
Older children need advice and guidance about money even more so. Don’t assume that financial education is coming from schools. While there are some programs provided by schools, you can also open teen-specific accounts at the credit union. This is especially important for teens when they are starting their first job or preparing to head off to college.
#5: Work with Teens to Achieve Their Goals
As kids get older, they need more hands-on experience in managing money. Though laws limit teens from having access to credit cards, there are still other resources available to them. Teach them how to write a check and manage a debit card. Talk about saving for a car. It’s also important to teach teens how to track their efforts by keeping a budget, monitoring their accounts online and reviewing their monthly statements.
To get started, talk to your children today about money. Then, open a basic savings account with your child at the credit union. Start incorporating money into the lessons you teach your children on a regular basis. Of course, it’s important for you to lead by example. Be open and honest with your children, especially teens, about managing money.
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If you have questions on teaching your children about money or would like to open an account for them, stop by or give us a call at 800-343-6328.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.