May 14, 2020
Encouraging positive attitudes about money in your children can have a lifelong impact on their financial habits as they grow up. Building a strong foundation of good money management habits and offering advice can help your children achieve financial independence as they take on more responsibility through college and beyond. Here are a few easy ways to instill positive money habits early and set your kids on a path toward financial responsibility.
As you spend, save, and borrow money, your kids are watching. Recognize teachable moments in your everyday life. Let your younger children see you make purchases with cash to learn how money goes from one place to another. When they’re a little older, introduce the concept of credit by showing them a credit card statement. Explain how a purchase of $100 can ultimately cost more because of interest.
Instill positive money habits by giving your kids hands-on opportunities to learn. Have your younger kids compare prices at the grocery store while your older kids can help estimate costs for a family vacation or large purchase. Show your kids that large and small purchases should be thought through and purposeful.
A simple way to introduce a personal budget is to create three buckets or jars to use for any money they receive: one for saving, one for spending, and one for sharing. For younger children, clear jars are helpful so they can see their money grow and also watch it disappear when it is spent.
Save. Encourage your kids to set aside a portion of any money their receive or earn for something they want in the future. This can help teach the value of long-term thinking instead of instant gratification.
Spend. This is an important step for children to learn about the consequences of spending. Let your child decide how they want to spend their money. It they make an impulse purchase that they later regret, they will be less likely to repeat that mistake later on.
Share. Whether it’s a local charity or fundraiser, encourage your child to donate to a cause they care about. Help them understand that their money can be used to help others and make the world a better place.
Receiving an allowance and being responsible for managing their finances can help your children understand the difference between wants and needs and learn self-control. Give your kids opportunities to earn money by doing chores, odd jobs, or other part-time jobs when they’re old enough to teach them that hard work pays off.
As your children grow, help them transition to bank accounts. Help them open a checking account to learn how to use checks, debit cards, online banking, and balancing their checkbook. A personal savings account can be a good motivator as they watch their savings grow with interest earnings.
Establishing a foundation of good money management now will prepare your children to be financially independent as they get older. Continue to encourage and praise their good habits. Every bit of financial knowledge and experience you pass on can help them become more confident and financially savvy in the future. Call your local branch to speak with a personal banker today to learn about checking and savings accounts that would work best for your children.