One of the most important jobs as a parent is to teach their children the value of money. Without this skill, they may enter the adult world with no sense of how to budget what they have and how to save for the future. Paving the way toward financial freedom will insure that they have money for emergencies, for the luxuries they want in life, and for the essentials like adequate food and shelter.
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Pre-School Age Children
Whether they find a quarter on the sidewalk or get a dollar from Grandpa, even young kids can save money. Help them see it grow by putting their money into a piggy bank. Preferably one that is clear so they can see the bulk of it getting bigger, because this is what children at this age can relate to. They won’t necessarily understand that one coin is valued higher than another coin, only that there are more coins in their jar than before.
If they want to make a purchase for themselves, like a toy or candy, have them physically take the money from their jar and hand it over to the cashier at the store. This will show them first hand that their piggy bank is depleted in exchange for an item, and the basics of money transactions.
Elementary Students
At this age, it’s time to start showing them the “if and then” scenario. They will become more interested in making purchases for themselves and maybe even their friends. Show them that “if” they buy this (video game), they then won’t have enough money to buy (trading cards, shoes, whatever it is that they might want also). It’s a great way to show them they must make choices when it comes to money.
Give kids allowances based on what they do around the house. You might have a base allowance for the expected chores and then various denominations attached to extracurricular chores like snow shoveling or raking leaves. You can choose to give them cash or if you want to encourage easy saving, give them Visa Gift Cards for them to stash away to save up for a big purchase. You can even customize the Visa Gift Card with a picture of them and text that might read: “Way to Go” or “Great Job!”
Teenagers
Now that they are a bit older and getting closer to going out on their own, it’s time to teach them about budgeting their money. It can be a simple budget, but even a simple one will help teach them that every dollar has its place. You might consider an app like EveryDollar (since teens are often attached at the hip with their phones anyway).
Once your child turns 18 they will be inundated with credit card offers. Talk to them about debt and how to avoid it (ideally this conversation has been ongoing since they were younger). Teach them that credit cards are not money that is handed to them; every dollar spent on a credit card represents a dollar they must hand over, plus interest charges and possibly penalty fees.
Get them started with a bank account. A savings account to begin with and then when they’ve proven they can handle that they can start a checking account.
If college is a goal (and why wouldn’t it be?) have them start saving toward their college career. They should take a portion of their allowance, part time jobs, whatever money they receive and put it toward this future goal. Not only does this help ease the financial burden of college (and defray costs) it also helps them put “skin” in the game so they are invested and feel like they are contributing.
Student loans take a huge portion out of many people’s paychecks every month. If at all possible, it’s best to steer clear of them and work out other ways to attend college. This might be financial aid, savings, and of course, scholarships. As soon as they begin high school, start perusing the scholarships that are available and what they can work toward. Other ways to keep costs low include going to an in-state university, going to a community college and working part-time to help with college expenses.
Teach your kids the importance of being content. They will be exposed to many things in person and on social media. They are going to wonder why they can’t have a more expensive car or why the family doesn’t live in a more expensive house. Teaching them to be happy with what they have will stem those thoughts so they don’t find themselves trying to keep up with the Joneses.
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