Plenty of parents want to, but aren’t helping their kids become financially literate. In a recent survey, nearly half of parents say they miss opportunities to talk to their kids about money and finances. And a quarter say they are very reluctant or extremely reluctant to discuss financial topics with their children. Kids, on the other hand, are eager for their parents to share their wisdom.
Even if you’re not teaching your kids, they will learn lessons about money one way or another. If you want to play a key role in shaping your children’s feelings, thinking and values about money, you need to give them the gift of financial literacy from an early age.
The earlier you start a child’s financial education process, the better. Lessons should begin before age seven, because research shows that money habits and attitudes are already formed by then.
Once your kids are old enough to know they shouldn’t be sticking pennies in their mouths, you should introduce them to coins and cash. Explain what money is and how it is used. Actually, showing them how money works is more effective. So let them see you making purchases with cash. Even if you pay with a debit or credit card, explain that you’re using your money to make purchases. When you shop together, show them receipts with the amount you paid.
Your kids’ early interactions with money will likely involve spending. They see you using it to purchase things. So it’s important to teach them from a young age that money isn’t just for spending—they should be saving money regularly, too. Learning to save isn’t just an essential money habit, it teaches discipline and delayed gratification, goal-setting and planning, stresses being prepared, and builds security and independence. Help your kids get in the habit of saving by giving them a piggy bank or savings jar where they can deposit coins or cash.
You can also open their own account at WKFCU. We have Scottie Savers for ages, birth - 12 years and Extreme Teen for ages 13 to 17. There is more about this at the end of the article.
Kids need to have money of their own so they can learn how to make decisions about using it. An allowance can accomplish that. However, you should consider requiring your kids to do certain chores to earn their allowance. Just about everyone values money they earn differently than money they receive.
In addition to helping kids to understand that money is earned, you can introduce an allowance system so they could learn to live within a budget. They can track how much they have coming in and going out and how much they’re saving. Learning how to budget now will help them when they enter the real world. Give them three jars for spending, saving and giving. They have to put some of their allowance in each jar but don’t specify how much. The decision is up to them.
A key reason that it is important for you, as a parent, to teach your kids financial lessons is because you can share your money values through those lessons. If you value giving to others, you can instill that value in your children by helping make it a habit for them from an early age.
Just as important as the lessons you teach your kids about money are the ways you discuss and handle money when you’re around them. For example, if you complain about having to spend too much on certain things and then take your kids on a shopping spree, you’re sending mixed messages.
If you want your children to develop good spending and saving habits, they need to see you making smart spending and saving choices. In short, practice what you preach. And preach with consistency. Educating your children about personal finance is a process that can take time. But if you put in the effort and continuously communicate a clear message about money, you will instill good habits that will serve your children well.
April is Credit Union Youth Month! We are celebrating our youngest members!
Be a Credit Union Saver & Your Savings Will Never Go Extinct is the theme this year. The Jurassic theme makes saving for the future fun and helps younger members appreciate the importance of putting money aside for the future.
Now is the perfect time to open an account for your child or grandchild for FREE.
We will waive the $5 Enrollment Fee and Make the First $5 deposit.
We will have a Kids Cash Giveaway -- 2 $25 Prizes -- on Thursdays - April 8, 15, 22, and 29.
When you open a new kids account or make a $25 deposit into an existing account, your child will receive a special gift bag full of goodies.
To Open A Kids Account:
You will need your child’s Social Security Card and your ID to open an account. Teens 15-17 will need to sign the account card and will need a second form of ID, such as a student ID or a Driver’s License. Teens 16-17 may open a checking Account.
For complete details go to our website at www.wkfcu.org/Kids-and-Youth/Youth-Month
(Partially reprinted from Forbes.com/advisor/personal-finance.)
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