Children learn from the ways their parents handle money. These days many parents are finding themselves reevaluating the ways that they spend and save. Here are some ways to start your kids on the right track (and maybe their parents, too!).
Give children an allowance or money for chores each week. Require your child to pay for things they want to buy out of their own pocket. Having a limited amount of money for the things they want forces a child to think carefully about purchases.
Help your child to open a savings account or use a piggy bank. Suggest saving a percentage of their allowance or earnings each week. Pay in denominations that are easily divided – quarters, one or five dollar bills – so they can immediately put the money away. Savings could go to a piggy bank or savings account, spending money to a wallet or purse. Make these places easily accessible.
Teach your child about savings using a savings calculator. Visit a website with a savings calculator, such as the Premier Source Credit Union Savings Goal Calculator, to teach your child how savings can grow over time. Consider offering a little extra money as interest on money your child saves to help encourage the savings habit.
Teach the difference between needs and wants. Teach your kids to set goals to save money for things they really want. This forces them to think hard before making impulse purchases that might waste their money. Before your child spends money or asks for you to buy them something, ask them to consider where they will put the item and how often they will use it. Ask your child to think back to something they wanted in the past few weeks and to decide if it was worth buying or if they would rather now have that money in the bank.
Talk to your kids about money. While shopping, or even walking around your house, explain the costs of things so that kids understand that you have many expenses beyond the things they want. It’s helpful for children to have an awareness of how much things cost.
Point out times your family has enjoyed that haven’t cost any money. Remind your kids that the things we truly enjoy are often inexpensive or free. Talk about the activities your family enjoys (hiking, ice skating, family game or movie night or even running through the sprinkler on a hot summer day) that don't cost a lot.
Visit a website dedicated to financial education with your child. Visit PocketCents, a site dedicated to helping everyone, from kids to seniors, learn how to make smarter financial decisions. Discover how to start saving, handle debt and credit, or plan for marriage, retirement, and other life events through interactive games, calculators, and short informational videos.
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