Teaching Children about Money: Ages 4-13
It’s up to you to decide when to begin teaching your children about money, but it’s also important to be prepared, should they start asking questions. After all, if you don’t teach your young children about finances, who will? These tips will help prepare you to teach smart financial habits.
You don’t need to be an expert
Setting basic guidelines about allowances or helping them save using a piggybank can be important steps toward your child’s financial future.
Consider an allowance – and Split It
An allowance is the best way to teach saving and budgeting for themselves. Around the age of 10, incentives help for completing simple tasks like emptying garbage or putting away the utensils from the dishwasher. That’s an easy way to adapt your child to the working world early on. You can also allocate an allowance into different buckets such as savings, spending, and charitable giving. Consider the use of labeled envelopes to split the allowance every time and have them contribute at church or a local charity in person to reap the emotional reward of supporting a cause.
Share your success (or failure)
As they approach their teens, telling children stories of past money mistakes or successes can help them learn from mistakes or prepare for success. These stories can be as complex or as simple as you want, depending on the child’s age and personality. Stories are an easy way to connect with children and to pass down family history as well as money values. Begin to show them the college savings you have built up over time.
Around the age of 8 or so, if your child wants to buy something outside of his or her budget – use that as a learning experience. Help them think of ways they can earn extra money and inspire entrepreneurship. This can help give them the confidence to solve their own problems, as well as develop more appreciation for money.
Set up a bank account
Once your child is old enough to at least have a basic understanding of concepts like interest (again, this will vary for each child), you should make a visit to Great Midwest Bank to set up his or her first bank account. Consider our Touchbanking App to deposit birthday checks and show them their balance. Rename those accounts with their first name so they can see it online. By helping your children understand these concepts at an early age, you can ensure they have plenty of practice.
Find your balance
Some parents think it’s inappropriate to discuss finances with children. Sharing detailed information may lead to anxiety or stress. It’s important to find the right balance so that your children are aware of the things they can do to improve their finances, but aren’t putting money ahead of more age-appropriate worries, such as school or developing social skills.
Lead by example
We don’t have to remind you that children often copy their parents’ practices. If you teach children the importance of savings accounts and budgeting but do not follow these practices yourself, your lessons probably won’t stick.
Want more smart savings tips? Check out more from our blog!
Credit: Advicent Solutions