The earlier you start teaching your children basic concepts of money management, the more effective those lessons can be, setting them up for lifelong benefits. But, in the hustle and bustle of raising children, it can be easy to overlook common but important everyday teaching opportunities.
Showing your children the value of money and instilling good financial habits doesn’t have to be complicated or even time-consuming. In this post we’ll discuss four simple things you can do to help set your children (of any age!) on a solid financial path.
1. Show them how money is earned
Money is an abstract concept, and it can be difficult to grasp. Especially in today’s increasingly cashless world, it may seem to a child that you simply need to tap a credit card to get whatever you want. From an early age, rather than simply giving them that coveted toy or game, give your children chances to earn money to pay for things they want. Allowances for chores and modest monetary rewards for their accomplishments (like good grades), can give your child the foundational understanding that money is something earned.
2. Teach them the importance of saving
Saving for goals—big or small—is a crucial part of smart money management. Even if they don’t have a specific goal in mind, creating a habit of saving some of that hard-earned allowance money for a rainy day or future need is equally as important.
Explain to your child the importance of saving, then help them create their own strategy. For instance, you can attempt a preliminary form of budgeting by dividing their money into three: one part for a short-term goal like the purchase of a want or something special, one part to go into their youth savings account for long-term goals or needs, and one part for immediate use. Not only will this process teach patience by showing them how long it can take to save up for expensive purchases, it will also give them an introduction to banking basics—an essential financial literacy lesson.
3. Include them in your shopping
Whether you’re shopping for groceries, clothing, or other household items (large or small!), take the time to include your children in your discussions and purchase decisions, explaining your thought processes. Teach them how to compare prices and make sound spending choices, and learn how many small purchases can quickly add up to a lot of money (a lesson in avoiding impulse buys!). Additionally, ask them to help you make choices as you shop, and explain why they made them. This both tests their skills and helps deepen their understanding.
4. Let them make their own decisions—and mistakes
Your child’s sense of responsibility and reasoning abilities are still developing. Teaching them what you know about money management is important—but so is letting them teach themselves.
Right now the stakes are low. Let them overspend on something, and let them feel disappointment when their money is gone. Allow them to skip out on chores on occasion, showing them instead how it’s set back their savings goal. Speaking of which, don’t force them to choose the perfect savings goals, either. If it’s a bad choice, they’ll learn from it. And letting them pick something they really want could inspire them to fully commit to their savings plan, more effectively driving home the lesson—a winning result!
Start Your Children Off on the Right Foot with a Youth Savings Account
Savings accounts like the AMNB Kids Club can get your children excited about savings, from prizes for meeting savings goals to birthday cards to remind them to keep up the good work. And as they get older, a basic checking account like our Clear Checking can help them take the next step on their financial journey.
Ready to start your children off on the right financial foot? Set up an appointment at your local AMNB branch today to open a youth savings account or checking account!