Kids and Money ManagementJune 26, 2014 - by Patrick Redo
Summer has arrived, and kids everywhere are dealing with a lot of free time. This may be a good opportunity to start teaching money-management skills. Teaching your children about money may seem like a daunting task. allU.S. Credit Union has put together some simple, age-specific recommendations on how you can teach your children to be financially responsible – before they get their first credit card!
Kids are most susceptible to everything you tell them at this age; so make sure you teach them good habits now. Buy them a piggy bank, and give them some money to specifically put into it. If they receive money for gifts, make sure to show them to save some of that as well.
This is a good age to start giving kids an allowance. A Responsibility Chart is a good way to teach the kids that allowance only comes if you earn it. There's never really been a consensus among parents on this issue; should kids make an allowance for helping out around the house, or are chores simply part of family life? If you're a believer in the former category, consider this Pinterest find from Uncommon Goods. This easy-to-create whiteboard calendar lays out household expectations and what each task is worth. This could be a great money-saving teaching tool for young children!
Set An Allowance Budget
Whether you reward your child for helping with chores, or just simply give them a regular spending allowance, it's a great idea to set up a budget. Help them realize what kind of "income" they'll be receiving. If they decide to spend all of it in one shot, let them know that they'll have to start all over in working toward a bigger purchase. Learning big-life skills starts early!
Saving Is Awesome
Chances are, there's something important to your family that required saving in order to buy. Maybe it's a past vacation, a swimming pool or spa, or something along these lines. Explain to your child where these things come from - especially if it's something they're enjoying over the summer vacation months!
Take Your Child To The Credit Union
Bring them in to allU.S. Credit Union and help open their own savings accounts, and instruct them to save a certain percentage of their allowance every week. Children in this age range are just starting to care about things like the latest toys and specific clothing brands, and now is a good time to help them learn the value of money. Here's a great practical way to slip a money management lesson into regular errands. ATMs can be a little confusing; explain to your child where that money comes from and why you're withdrawing that particular amount. Added bonus - give them a certain amount that they can "help you" spend on another errand.
Pre-teens are looking for some independence, and getting their first job might be a perfect way to do so. They can mow the neighbor’s lawn, babysit their cousins or paint their grandparents fence. Have them come up with ideas that suit their interests, and propose these moneymaking endeavors to their possible employers. Kids in this age range are ready to learn about the onslaught of credit cards – and how dangerous it can be to spend over the amount of money you know you’ll make to pay off your bill.
Make a Wish List
There aren't a ton of present-giving holidays during the calendar year, so if your child has a short list of things they really want, have him/her make a list. Find out the cost, and motivate them to save their money to put toward that item. One idea we really like; as they make progress toward saving for what they want, offer to match the cost. Remember, hard work deserves a reward!
Teenagers are old enough to have their own jobs, and can really start to take (guided) control of their financial future. Discuss with your teens the importance of staying on top of credit card debt, and recommend that they start with a checking account and debit card instead. If they DO get a credit card, make it a low-limit card so that you and they can work on budgeting until they get the hang of it.
When all is said and done, lots of young adults still find themselves in financial trouble because we live in an ultra-consumer society. With younger children, emphasize that things are not the most important part of life. Having the trendiest clothes, toys, etc. is a lot of fun, but in the long run, many of the things we come to value are imposed on us by what we see on television and in magazines. A certain amount of skepticism when it comes to consumer culture can go a long way in helping kids save money!
These are only a few pretty basic ideas for kids and money management. Is there a way you teach your kids about finances? Leave us a comment and share your ideas! If you feel like you need some additional help explaining any of these financial topics to your children, bring them by allU.S. Credit Union! We’re here to support you and your family, just like always!
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