Even before they’ve hit their teen years, kids are thinking about money. Specifically, they’re thinking about how to spend money on the latest apps, games and everything on store shelves. Yet, teaching them simple money lessons that will last a lifetime is easier said than done. Here’s how you can help young children learn and grow with smart money habits.
Show them the value of saving
Give your child a piggy bank where they can save their allowance and gift money. Help them determine what short- and long-term goal they want to save for. If it’s the latest video game or the newest toy on the market, they may sulk or remind you that their friends have it. That’s when you help to determine how much they will have to take out of their piggy bank to buy it. Seeing the money disappear might make them think twice.
What if they’re saving for something big? Explain to them how buying this item now will negatively impact buying the other item later.
Money Lesson: Your children learn how to make tough choices about where and when they spend their money.
Let them try (and fail, if necessary)
We often remind children what a big boy or girl they are. So why not let them experience what it’s like to buy on a budget like big kids do? Determine how much they will need to save out of their allowance or birthday money, and for how long to meet their goal. When the time comes, if they don’t have enough money saved, don’t bail them out! Revise the savings plan so they have to continue saving.
Money Lesson: Together you and your children can develop a savings plan focused on purchases important to them.
Be a positive money role model
It’s one thing to tell your kids about the importance of being money-wise. Showing them you follow the same rules will go a long way. Let your children help make the grocery list for the week by planning meals and snacks. Once at the store, teach them how to comparison shop. Discuss why you’re buying the $2.50 pack of cookies over the $4 pack. Explain that now you have enough money for ice cream, too.
Money Lesson: Show children how to live within their means.
Visit the Credit Union
Traditionally, jars have been a great way to teach youth about budgeting. They can divide their money, adding a little to each jar. These days you have the added benefit of your Credit Union to help with lessons on good money habits. Take the child and their savings to the branch. They can open or contribute to a Fat Cat Account, designed for kids aged 12 and younger.
Money Lesson: Help children discover how to track and manage their own money.
Create a money contract
Create an agreement between you and your child. This makes them accountable for the money you provide for allowances, borrowing or sharing of costs. You can even customize it with kid-friendly language and stickers, or drawings related to money. Download an LGFCU Child and Parent Financial Contract you can use with your youth. Post your contract in a visible place like on the refrigerator to remind everyone of their responsibilities under the agreement.
Money Lesson: Written agreements document and promote accountability.
Use these tips to lay the foundation for a future of good money management. Start kids out early with valuable money lessons they can always use.
The advice provided is for informational purposes only.