Teaching Your Kids About Money
We all know how important it is to budget and save money. Some of us started learning these skills at a young age and some of us are still learning as adults. Talking to your kids about the importance of finances, budgeting and saving now will help ensure they have the tools they need for later in life.
Talk it up! Talking to your kids about why and how you save money can give them the understanding of how important it is. Explain it in a positive way: We save money for things like vacations and special events as well as rainy days when emergencies arise. Both reasons are important to be prepared for so be honest about the ups and downs that come with saving money in general. Find other family members and friends that are savvy savers that can be role models for the kiddos as well! That way they can see that budgeting is important to many households, not just yours.
Wants vs. Needs:Only 20% of kids save money consistently on a monthly basis and as kids get older, wants and needs become more difficult to distinguish. Instead of saying “It’s too expensive” (which implies we would buy it if we had the money), explain by using terms like “That item isn’t a good value” or “We are not going to spend our money in that way because– “. This lets the child know that you are being cautious with your purchasing decisions. When shopping together, explain why you purchase the products you chose. Are you influenced by pricing, quality or quantity? This will help them in making decisions when they are shopping.
Setting Goals:There are many ways kids get money whether it’s a weekly allowance or presents for birthdays and holidays. Explain why it is important to set some aside for savings. Like you, kids should set savings goals. Giving them a set amount to spend each week teaches them how to focus on how the money is spent. Once the money is gone so are the treats and toys until the following week. If they are able to save money, they can put it towards a bigger item later.
Take it to the bank (oh, I mean credit union)!:We all know the easier it is to access your money the easier it is to spend it. Kids love raiding their penny banks when they hear the ice cream truck or go to the corner store for candy. Taking them to a Credit Union and opening an account for them will help cut back on this urge. Explain that this is their account and show them how the ledger works. This way they can see their savings grow as they save more and know they are reaching the goals they have set.
We all had to learn that money doesn’t grow on trees. It is much easier to learn something the right way from the beginning rather than break bad habits later. Teaching your kids the basics and setting good examples can really prepare them for the real world. So get out there and show them how it’s done!
