How to Start Financial Management Conversations with Kids
July 25, 2019
It’s never too early to start teaching kids about money. Good financial management skills learned at an early age can have a lasting impact on the rest of a child’s life. Educating your children about financial wellness will help them build healthy spending habits for the future.
In fact, this is one of the most important areas where you can truly change the course of a child’s life.
Taking some time every day you can foster solid money management skills in children. Consider routine activities as teaching moments, such as grocery shopping, visiting the credit union, paying bills, or comparing prices online. No matter the kids’ ages, anytime can be a teaching opportunity.
This is the age range to introduce simple money facts. Teach kids this age how to identify different denominations of coins and bills. Try giving a child a small amount of money for a shopping trip. Teach them how to work with the amount of money they have to spend.
Ages Five to Eight
When kids reach school age, goals become plausible and attainable. Try setting a monthly savings goal with a child. If you decide upon an allowance, teach them to pay themselves first – deposit part of their allowance into their savings account each week. Kids at this age also love being part of adults’ daily activities. Bring them into the credit union to see how to make deposits or use the coin-counting machine.
Ages Nine To 12
As kids reach middle school, this is an ideal age to hone skills, like comparison shopping or budget development. Encourage children to craft a weekly spending plan. Have them track what they spend and earn weekly with a budget diary. Seeing it in writing helps to underscore spending habits.
Spending habits mature as kids do. Research sites estimate the U.S. teen market has more than $200 billion in annual spending power. As they spend more, reiterate the value of money and consequences of over-spending. For example, have a teenager research a large purchase – perhaps a car, home improvement project, or vacation. Or show how you pay bills online and how quickly money can go. It’s also good timing to explain borrowing and credit building and the benefits of a checking account or debit card.
Teaching children about finances just takes a bit of forethought, a little patience, and some creativity. Remember, a financially literate child grows into a financially responsible adult!