How to Set Your Children Up for Financial Success
Giving your children an early start on creating good habits can help them learn to save, budget and use money responsibly.
Good financial habits don’t just happen. They’re learned, and children are never too young to begin those lessons. You can show your children how to set financial goals, manage a budget, use credit cards wisely, etc. There are even great sources of financial literacy for kids. Wondering how to teach kids about money? Here are seven ways to prepare your children for financial success.
- Show them how to budget.
Introduce your children to budgeting through simple games emphasizing saving and planning, like Monopoly or LIFE. Explain that you need to take in more money than you give out. Then show them a simplified version of a budget and encourage them to ask questions about anything they don’t understand.
- Read a book together.
Financial books can turn complex topics into entertainment, and children learn valuable lessons by discussing the ideas in the book with you. Choose a book written for their age level. Carve out time to read together and take timeouts to discuss new concepts.
- Have them start saving.
When your children receive birthday money, put a third of it in a savings account. Starting this habit early sets them up for later success and is great for teaching kids about money. Let them save up to buy something big, like a new toy, to create a connection between savings and rewards.
- Explain the benefits of insurance.
Teens are old enough to understand the concept of insurance, and a great time to explain it is when they start to drive. Explain how auto insurance protects them from high payouts if they get in an accident. Also, discuss why buying life insurance is essential and how much they should get. We can help you remove a policy for your child, giving them another hands-on learning experience.
- Teach them about credit cards.
Credit cards provide an excellent way to buy things you can’t afford to pay for now. They can also turn into a financial burden very quickly. Explain the best way to use a credit card (by paying off the balance regularly) and show how interest rates and annual fees can add to greater debt.
- Pay them for chores.
Giving children an allowance directly tied to doing their chores imparts a lesson. They see the link between working hard and receiving a reward.
- Open a bank account for them.
Take them to one of our branches or use our digital banking options to open a savings and/or checking account in your child’s name and get them a Visa card if they are old enough to take on that responsibility. You can also meet with us to discuss your insurance options as part of your child’s financial education.