6 Tips to Guide Children through a Healthy Relationship with Money
Presented by Member One Federal Credit Union
With school out for the summer, the kids are likely hanging around the house more than usual. Your little audience is watching and probably soaking in more than you realize—which includes how you manage finances. Healthy financial habits begin at a young age, so what better time to teach responsible spending and saving than during a break from the daily grind of school? Here are a few ways to help your kids get started on the path to financial success.
Set an example. Parents who make poor financial decisions like impulse purchases, excessive credit card use, or have arguments about finances only confuse children about how to make smart money choices. Make a point to practice what you preach by not only explaining positive financial habits but demonstrating them as well.
Begin early. Once children start saying, “I want,” it’s a good time to teach savings habits. While they won’t understand compound interest or annual percentage yield, you can explain how we sometimes have to wait for the things we want. Delayed gratification is an important lesson to learn.
Give commissions, not allowances. There is nothing wrong with giving your child money each week, but it should be earned. Have them perform chores like mowing the lawn, taking out trash, or doing dishes. This will teach them the value of work and prepare them for adulthood, and starting a job outside of the home.
Make it visual. For younger children, give them transparent jars to keep their money in so they can see their progress. For older children, it’s wise to open a savings account with a local credit union. Online banking can help them easily monitor their progress.
Set savings goals. It’s much easier to put away money when you know what you’re saving for. If your child wants a game or pair of shoes, show them how much it costs and how long it will take before they can buy the item. You can also show them ways to reach their goal faster by earning more money through additional effort.
Explain responsible credit card use. As a teenager, getting your first credit card can be very exciting. Make sure your child knows how to use the credit card wisely and warn them that they should only make purchases if they can afford to pay off the balance each month. It’s also important to explain what credit is and how it affects their future—from buying a car to getting their first mortgage.
Financial responsibility begins at a young age. Use these tips to help teach your child healthy money habits that will set the foundation for success now and continue well into the future.