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Back to School: Building Good Financial Habits in Kids

Teaching your child or children about money can be challenging. Whatever your own attitudes toward personal finance may be, you can’t expect kids to learn good financial habits on their own. Research shows that you, the parent, are the most important influence on your child’s financial habits. And many of those habits are developed by age seven. Before you panic, remember that any effort you can put into helping your kids understand good financial habits should pay dividends later on. So, start where you are and go slowly. Perhaps you can even improve some of your own financial habits along the way.


Understanding the value of a dollar, the work required to earn money, and the costs of everyday expenses are the building blocks of financial literacy.


Saving and Delayed Gratification

Teach your kids to wait, save, and get something they want with their own money. Easier said than done? Try these strategies:

  • Head off temptations before the begging starts. For example, before you enter a store with your child, remind them that you are only here to buy x, y, or z, and are not getting anything that isn’t on the list.
  • Focus on the long-term. When your kids want to spend money on an impulse purchase, remind them that if they spend x amount on a particular item today, it will take them that much longer to save for the bigger thing they want, such as a Lego set.
  • Try distraction. Is your kid loudly whining for something in a store? It’s tempting to give in to avoid public humiliation, but try to keep your cool and distract your child with a new joke, funny video on your phone, or special secret.
  • Build a savings habit. Teach kids to automate their savings with a monthly trip to the bank or a reflexive decision to put birthday or Christmas cash into their savings account.
  • Review monthly statements. Kids may not completely grasp the concept of compound interest, but seeing how their balance goes up each month, even if they haven’t made a deposit, can be a powerful illustration of the benefit of earning interest on their savings.

Does your child have his or her own savings account yet? Check out our Easy Save Plus account for savers under 18. There is no monthly service fee and only a $10 minimum deposit.


Where does money come from?

As a parent, you cover the costs of essentials like food, clothing, shoes, and school supplies; plus some extras like birthday gifts for friends’ parties, family entertainment and vacations, and anything else you decide to pay for (each family may have different priorities). Anything that falls outside of your approved expenses is on your kid. So, where will the money come from?



While many parents fret over whether they are doing allowance “right,” there are no hard rules backed by research. Best practices for giving kids an allowance include:

  • Consistency: Whatever you decide, stick to it. If you fall off track one week, it’s okay; just get back to consistency.
  • Freedom: With a few exceptions that you announce in advance, kids should be able to spend their money on whatever they want, even if you think it’s a waste. This is part of the learning process.

Keep chores separate: If there is one research-backed rule for allowance, it’s to keep chores out of it. Parenting experts do agree that chores are good for kids, but they shouldn’t be tied to allowance.


Budgeting and saving for the future are two essential financial habits that everyone needs to learn as early as possible.



If your child is younger, they may not understand what a job is. That’s why it’s important to show them by participating in Take Our Daughters and Sons To Work Day, signing up to speak at Career Day, or simply giving your child a tour of your workplace whenever convenient.

Provide opportunities for kids to work for pay. A child who isn’t old enough to get their first part-time job at the ice cream shop or drug store can still make money babysitting, mowing lawns, and doing other extra jobs outside the scope of regular chores.

The way you talk about work is also important. Even if you don’t love your own job, try not to give the message that jobs are the absolute worst things in the world. Work may not always be fun and you may not always see eye-to-eye with your boss, but having a job that pays your bills and provides a decent standard of living is still something to be grateful for. At the same time, money isn’t everything and you can discuss the trade-offs of choosing a career just for the starting salary versus pursuing something you find rewarding (teaching or social work, for example) that doesn’t pay as much.



Grandparents may give some cash on holidays and birthdays. Then there are the bigger life events like First Communion, Bar or Bat Mitzvah, Sweet 16, Graduation, and more. In anticipation of a cash windfall, talk to your child before the event about where the money will go. It doesn’t have to all go into savings or be spent; you can divide it between these goals. It’s not a bad idea to talk about charitable giving, too—do they want to make a donation to the local animal shelter or food bank?


Budgeting and Setting Financial Goals

Teens are ready to learn how to set financial goals and create a budget that supports those goals. While saving for emergencies and retirement are two of the most important financial goals for everyone, talk to your kids about their specific desires such as buying a car or a new smartphone, doing study abroad at college, starting a business, etc.

Once they’ve set goals, it’s time to learn basic budgeting math:

  • How much do I bring home each month?
  • What are my monthly expenses?
  • How much is leftover once my monthly expenses are subtracted from my income?
  • Allocate what’s left toward savings goals while also leaving some discretionary spending money for the fun stuff.

Looking for a budgeting tool? Our new online and mobile banking platforms come with Money Tracker, a Financial Management tool.


Think through large future expenses – such as education, a car, or home loan – and determine the steps you’ll need to take to tackle these long-term goals.


Use credit responsibly

Federal regulations have made it harder for kids under 21 to get a credit card, but it’s still important to teach them about debt and using credit responsibly so they won’t rack up a balance when they do get their own credit card. Furthermore, building a positive credit history and score is an important step in young adulthood, but you have to use credit to build a good credit score.


Open an account with Your Hometown Bank!

If you want your kids to have a healthy financial future, it all begins with you. Be the example of how your kids should save, spend, budget, etc. If you want them to truly understand the importance of these skills, let them see firsthand how they are being used by their parents and guardians. Need help? At American National Bank & Trust Company, we believe being local is more than just having an office in the community. It’s about looking out for our customers with better banking options and quick, local decisions. Visit your nearest banking location in Virginia or North Carolina to open a checking or savings account for your child and get answers to all of your financial questions.


Looking for financial guidance? Contact the team at American National Bank & Trust Company to speak with a member of our team!