7 Great Tips for Teaching Your Child About Money
April 20, 2012 | NerdWallet.com
Money management isn't just for adults. Kids may not have to worry about paying bills, but if they're earning an allowance, receiving birthday money from Grandma, or working a first job, they're already managing money. You can help them make the most of it by teaching them how to budget, spend, and save. Studies continually show that adults make better financial choices when they learn good habits in their youth. Here are seven tips from the financial literacy experts at NerdWallet to get you started.
1. Start young
As finance journalist Beth Kobliner so eloquently states, your child is old enough to learn about money as soon as she starts saying "gimme". Even if your toddler is not ready to count pennies, she still needs to learn basic skills and underlying concepts that set a good foundation for money management, such as decision-making (weighing competing desires and making trade-offs) and patience (delayed gratification).
2. Show them how it's done at every opportunity
Your child already looks to you as a financial literacy expert. It's good to talk about larger concepts, like your household budget, but your lessons don't have to be complicated or forced. You make simple money management decisions every day, and each one can become a teachable moment. For example, a trip to the grocery store can become a lesson in budgeting. Build your list with your child, explain what you're purchasing and why, and let her help you make decisions both at home and at the store
3. Let them practice
If your child is too young to have a job but old enough to make her own purchases, give her a reasonable allowance and help her set monthly and yearly savings goals.
4. Work with cash first
This is especially important if your child is in elementary school, but it's a good idea for anyone who is handling money for the first time. Kids literally need to see money coming and going before they can view spending and saving as solid concepts.
5. Open a savings account together
It may be your child's very first account, but that doesn't mean she has to settle for less. Alliant's Kidz Klub Savings Account gives kids the exact same benefits as their parents: 0.95% APY on balances of $100 of more, and no cap on the amount you can save.
6. Get your teen a checking account
Your teen is more independent than your 8 year old, which also means that their money management needs become more complex. Checking accounts provide teens with a safe place to store money and practice account management skills like making deposits and using a debit card. Teens almost always need an adult cosigner to open an account, but that's great for you. You'll be able to monitor their account activity and interfere if problems arise.
7. Do your homework
Homework doesn't just pertain to kids; adults need to do homework too! In addition to Alliant's webinar collection, you'll find a wealth of great financial literacy resources online. Here are a few of our favorites:
Federal Reserve Education: Activities
A library of financial literacy activities put together by the Federal Reserve. Activities are organized by topic and grade level.
Online Games That Teach Kids About Money
Brought to you by the Washington State Department of Financial Institutions, this is a great list of links to money management games for kids of all ages.
NerdWallet's Financial Literacy Orientation
Originally created for college students, this multimedia financial literacy program is great for high school students, too.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Alliant Credit Union.
© 2012 Alliant Credit Union. All Rights Reserved.