Money can be a challenging topic to discuss with your children. Some parents feel like sharing too much about the family budget may overwhelm them, or on the other hand, knowing how much they may have may entitle them. But the fact is that kids form money habits by age 7, so you must help lay the financial foundation they need to make positive and healthy money decisions moving forward.
Here are five tips to help you develop money-smart children:
- Be a good example. As a parent, you have more influence on your children than anyone else, and they will try to mimic your actions. Take great care to show your child how to save and spend money. For example, use coupons at the grocery store and show them how to compare products. Avoid buying things “on a whim.” Instead, save for something you want to purchase, and let them know your process—for example, your next family vacation.
- Let them experiment. Give your children opportunities to earn and manage their own money. For example, when they earn money doing chores or babysitting, teach them how to save and where. Or consider giving them control over the weekly grocery budget when they are out of school—give them a budget, help them plan the family meals, and then give them the cash to purchase and cook the family meals for the week. You may end up with a lot of macaroni and cheese, but you’re teaching them so much more! If they make a mistake, it’s better to make that mistake with $150 now instead of $100,000 later in life.
- Show them how to budget and make it fun. Make your children a part of your budgeting process. Talk to them about the cost of electricity, trash pick-up, insurance, and more. If you’re planning a family vacation, get them involved throughout the process—not only will they feel more engaged during the vacation, but they will likely not need as many souvenirs. Set goals to save by the end of each month and discuss ways they can help throughout the month. Finally, make plans to review and celebrate staying within the family budget. You’ll find your children will soon look forward to budget review meetings.
Did you know you can manage your spending using Online Banking? Go to your account to see the many tools available. And you can even download your account information regularly to Quicken, Quickbooks, or Microsoft Money. Start here.
- Talk about money. Your children can learn about money wherever they go. For example, share why you choose gas where you do or use a debit card instead of a credit card to make certain purchases. If you own a business, talk to your kids about why you make certain purchases, how you pay for them, and how much to purchase. The more you discuss the importance of safe money management habits, the better off they will be as time progresses.
- Review how and where to save. There are special accounts at most financial institutions to help young people save and manage money—but you will need to be part of that process. Discuss what you look for when opening a checking or savings account and why that’s important. For example, you can help your teenager sign up for a LINQ checking account with no monthly service fee or minimum balance requirement ($1.00 minimum to open), among other benefits. And, since teens are under 30 years old, QCB will match the opening deposit (up to $30) and even deposit another $30 into their account for enrolling in EZ-Allowance or Direct Deposit. Learn more.
Ultimately, your efforts in teaching your kids good money habits today will give them the confidence they need to manage money effectively in the future. Yes, you will sometimes fail (and so will your kids). But in the end, when they master money management skills as children and teenagers, they will be a step ahead as they grow older.