Tips for Teaching Your Children about Money
Life offers many opportunities for parents and grandparents to talk to your children about money and teach them the basic concepts of financial empowerment – things like saving, spending less than they earn and, when they are adults, using credit sparingly. As we celebrate National Credit Union Youth Week and Jump$tart Your Money Week April 22-28, here are a few tips to get you started. We are introducing several children’s books about money this week in our Kids Centers that might be good conversation starters.
- Talk to your children about money. Take advantage of everyday situations, such as a trip to the grocery store or the credit union, to teach them how to compare prices or where the money comes from when you punch the buttons at an ATM.
- Don’t assume your kids know even the most basic things about money, regardless of their age. They may have heard you jokingly tell your spouse, “Oh, I didn’t spend any money today. I charged it.” Make sure they understand the cost (and dangers) of credit. Explain that items cost even more than the purchase price when you add interest charges.
- Teach your children to set goals and save their money to achieve those goals. Keep a photo or other visual reminder of what they are saving for where they can see it. Make a big deal out of it when they reach the goal and don’t delay in taking the child to purchase the item. Reinforcing the reward aspect of saving goes a long way to establishing the saving habit.
- When giving an allowance, pay it in denominations that encourage saving. For example, if the allowance is $5, give it in five $1 bills instead of one $5 bill. Encourage them to save at least $1 from each allowance.
- Help children learn the difference between needs and wants. This will prepare them for making smart spending choices in the future. Let them see you make wise purchase decisions yourself. You have more influence on them than you might think.
- If you choose to give your child an allowance, make sure you pay it on time every time. This sends the message that it is important to pay your financial obligations when they are due. Not paying on time or skipping payment entirely at times teaches them…well, you don’t want to teach them that lesson.
- Don’t buy your children everything they ask for, even if you can afford to. They need to learn to make wise decisions on purchases and to wait (and save) for the things that are really important to them. Children who learn to prioritize their spending learn the most valuable money management lesson: to live within their means.