It’s never too early or late to teach your children how to be masters of money. Whether they’re preschoolers with a piggy bank or teenagers working their first part-time jobs, it’s a good idea for parents to learn to recognize those golden opportunities to show them how money works. In the long run, you're helping them build life skills that will pay dividends for years to come.
The American Bankers Association (ABA) pulled together a list of tips that can help parents teach money at home.
- Talk openly about money with your kids. Communicate your values and experiences with money. Encourage them to ask you questions, and be prepared to answer them — even the tough ones.
- Explain the difference between needs and wants, the value in saving and budgeting and the consequences of not doing so.
- Set up a chore chart and give your children an allowance for completing their tasks. Require them to save at least a small portion each week. The three jars method, one for spending, one for saving and one for charitable contributions is a good way to impart a sense of responsibility.
- Open a savings account for your children and take them with you to the bank to make deposits, so children can learn how to be hands-on in their money management. Minnwest Bank's Thrift Savings Account has no monthly fee for kids under the age of 22 and offers a competitive interest rate. It's the perfect tool to help kids accomplish their savings goals.
- Be an example of a responsible money manager by paying bills on time, being a conscious spender and an active saver. Children tend to emulate their parents' personal finance habits.
The best financial lessons are part of everyday experience.
Look for opportunities to talk about money, read books aloud and play games that center around spending money wisely. Be open and honest when you discuss your financial experiences—good or bad. To help you get started, the ABA listed some specific examples of teachable moments below:
- At the bank: When you visit the bank, bring your children with you and show them how transactions work. Get the manager to explain how the bank operates, how money generates interest and how an ATM works.
- On payday: Discuss how your pay is budgeted to pay for housing, food and clothing, and how a portion is saved for future expenses such as college tuition and retirement.
- At the store: It’s easy to give clear examples of “needs” and “wants” using different kinds of foods at a grocery store. Milk (for strong bones) is a need; soft drinks are a want. Explain the benefits of comparison shopping, coupons and store brands.
- Chores and allowances: As mentioned above, assign chores and give them a monetary value. Discuss ways to budget and divide allowances. Encourage children to set a financial goal, such as saving for a bike, and figure out how to achieve it.
- Paying bills: Explain the many ways that bills can be paid: over the phone, paper or by check, electronic check or online. Discuss how each method of bill pay takes money out of your account. Be sure to cover late penalties, emphasizing the importance of paying bills on time.
- Using a credit card: Explain that credit cards are a loan and need to be repaid. Share how each month a credit card statement comes in the mail with a bill. Go over the features of different types of cards, such as ATM, debit and credit cards.
- Browsing the internet: While online, explain to your children how valuable their personal information and privacy is to you, to them and to online predators. Discuss the risks and benefits of sharing certain information. Then, as a family, make a list of rules for keeping personal information safe online.
- Planning a vacation: Whether you are planning an outing to a local amusement park or a once-in-a-lifetime trip, emphasize the value of saving as a family. Set a family savings goal that involves your children. Figure out the cost and discuss ways everyone can help to reach the goal.
Bottom line, it's important for kids to learn that earnings are important but knowing how to grow wealth and live within one's means can set the course of their life. Download our Minnwest Bank Financial Education Activity Book geared toward Elementary School students as a fun way to get started today!