Empower kids to make smart money decisions
Learning how to manage money wisely is an important skill that can set children up for financial success in life. But it’s harder to explain the value of money in a society that is increasingly becoming cashless.
When children don’t see real money being exchanged, it’s harder for them to grasp the basic concepts around how it is earned and spent on things they need and want.
April is National Credit Union Youth Month and a perfect opportunity to talk with kids about money. In a CNBC Survey, 83 percent of U.S. parents said it is their responsibility to teach children about money; yet only 15 percent talk to their children weekly, and 31 percent never do.
Here are some tips to make money a regular topic of conversation in your home:
Start early and make it fun
Children love to role-play. Play simple games with preschoolers that involve pretend money and food, to help them understand the concept of making purchases. Use coins to teach counting, and involve them in making grocery lists, reading price labels, clipping digital coupons in grocery store apps, and making selections at the store. For older children, playing board games like Monopoly or the Game of Life teaches them to strategize and the importance of budgeting and saving for the future. There are also educational apps that teach older children how to save in a fun way—with games and rewards they can earn along the way.
Help kids set savings goals
Children may be more motivated to save when they have a specific goal. Talk with your kids about wants and needs and help them set age-appropriate goals. Then brainstorm ways to earn money for things they want. This could be doing chores at home or for family members, pet sitting, or getting a part-time job as a teenager.
Help them save at home
Use a clear jar to save money at home instead of a piggy bank. Once the coins reach the top of the jar, help kids count it to see their progress. As a reward, let them spend a little when they reach a milestone. Consider matching your child’s savings to help them reach the goal faster. That will keep them motivated and they are less likely to spend their money sooner. Don’t forget to celebrate when they reach the goal!
Make a budget
Use simple language to teach children how adults earn money and make spending decisions. Ask them to help write a budget for basic needs like mortgage or rent, food, car payments, and cell phones. Explain how your family handles any shortages each month and what your savings goal are such as a new car, vacation, and college. Include a savings line on the budget to help children get into the habit of saving each month. Don’t forget taxes! Children need to understand that we don’t keep everything we earn.