Teach Your Kids About Finances
Teaching your children the value of money can be a tricky area to navigate. You want them to understand the value of money, yet you don't know how strict is too strict.
Here's why an allowance is a great tool with kids:
- Allowances teach kids how to manage money because they are given a regular amount of money each week to do with as they please.
- When kids have their "own money," they are able to make mistakes with it (buyers' remorse) on a much smaller scale.
- Kids begin to understand how much things cost and begin to make spending choices.
Kids also seem to have a greater appreciation for things they purchase with their own money - as opposed to something that was bought for them.
When do I start?
Once your child starts to understand the concept of exchanging money for "things," they are ready to start having an allowance. This can be as young as pre-school. A great way to teach them the concept of exchange is to play "store" at home with "play" money. Set up a store and have your child "buy" things while helping them understand they only have a set amount of money to play with.
Another consideration is whether or not the allowance will be tied to chores around the house and if so, what those chores will be. Will they include tasks like making their bed, putting their clean clothes away and clearing the dinner table, or are they expected to do those things regardless and the allowance is tied to "above and beyond" items? You may consider making a chore board that is hung and marked off each week, especially if the child is young. This will help them visualize what needs done each day.
As your child gets into their teen years, another money-managing tactic that some parents have found helpful is to give the teen a monthly, not weekly, allowance. It takes money management and budgeting to the next level by helping your teen better plan their spending habits.
Finally, it is also good to teach your kids that there are three things you can do with money - spend, save and share. Help them do a little of each every week.
In today's fast-paced world of "on-demand" TV shows, mass media and credit cards, it can be difficult for parents to find ways to teach kids to value and take responsibility for money.
The first step is to have an open dialogue with your child about money - what it is, how it works and why it's important. These conversations can start as young as the toddler years and can be more generally focused - such as pointing out how much things cost while you are running errands. This will also teach children their numbers, too.
By the elementary school years, your child will start learning about actual money - coins and dollars. This is when they will start to really understand the value of the money. You may consider giving them a small weekly allowance for doing some basic chores around the house - making their bed, putting their clean clothes away or clearing the table after dinner.
At this age, kids will also begin getting money in their birthday cards and from the Tooth Fairy, and this is a great forum for teaching them the importance of saving their money.
As your child gets older, another way to teach them to value money a bit more is by finding creative ways for them to earn it. This can be as simple as setting up a lemonade or hot dog stand during your neighborhood yard sale, or encouraging them to mow lawns or rake leaves for money. Kids will really begin to understand the correlation between jobs and money when they begin earning it themselves.
Our KIDS 1st Club is a special savings club just for young members up to age 12. It's a cool way to not only save money, but to teach them the importance of saving in a fun way.
Once your child has a KIDS 1st account with a $5 opening deposit, he or she will receive:
- A free piggy bank to keep money in until you can bring the child to a branch to make a deposit.
- Use of our free coin counters that are available at our branches to make it easy and fun to count all the change that kids often collect and save.
- And, every time your child makes a deposit into his or her KIDS 1st account, he or she can pick out a free toy from our KIDS 1st Treasure Chest.
It is never too soon to start a savings account for your child. Before your baby is born, you'll receive lots of items to give your child a great start - everything from cute little outfits and booties to necessities he or she will need to be safe like cribs, car seats and strollers.
Once your baby is here, though, you'll probably find that grandparents, aunts and uncles will want to give the newest family member a monetary contribution for the future.
You may also choose to stick a little away each week, or each month, for your child - with a goal to make it available to them when they are older. If you simply stick away $10 a week every week from the time your child is born until the time he or she turns 19, they will have $9,880 (without interest factored in). This could be a nice start to a down payment on a car, a home - whatever they need. It just goes to show how nicely saving just a little bit at a time really adds up.
We offer two age specific savings clubs for our younger members. Children ages birth to 12 may be enrolled in our KIDS 1st Club while older kids ages 13-19 may be enrolled in our iMember Club. A minimum $5 opening deposit is required.
KIDS 1st Club members receive:
- Choice of a toy from our treasure chest when every time they make a $5 deposit
- A free piggy bank when the account is opened