Financial literacy is a crucial part of your child's education. It helps them become more self-sufficient and over time increases their chances to be financially literate.
- Communication with kids is important
- Help children write down specific goals
- Encourage your child to think before buying
- Assist them in turning mistakes into learning opportunities
1. Talk the talk and walk the walk
Explain to your kids why you make some of your financial decisions. Why do you shop generic brands, take the bus to work or pay your bills on time? If possible, communicate with your kids on a regular basis. Sitting your kids down for a lesson in Finance 101 may not best the best approach. Instead, try to find some time with your kids to have discussions about money during family bike rides or while you are driving in the car. You have a captive audience! A good way for your kids to develop basic financial skills is by following your example.
2. Provide a place to save
One way to start your kids on the path to financial literacy is introducing them to Family Money. Download the app and watch your kids learn the basic steps to take charge of their financial futures. With Family Money, they can save, spend, and become money-savvy. You can see their spending habits right in the app.
3. Think about giving kids chores
Chores are a great way to earn money. Encourage them to follow the 50/30/20 plan. Children can set aside 50% of their allowance to spend, 30% to save, and 20% to set aside for family birthdays or celebrations.
4. Write down goals
Sometimes goals can seem easier to achieve if they are written down. Work with your kids to identify goals and the steps they need to take to make their goal a reality. For example, if they want a new phone, saving $200 may be the goal. Next, write what steps are needed to make that money. What would it take to make that goal a reality sooner— extra chores, birthday money, etc.
5. Save before spending
Once kids complete their chores and are paid, their next step may be to keep some of those dollars. A good rule of thumb is saving comes first because money can only be spent once. Once it is gone, it’s gone.
6. Match allowances
Consider offering matching funds to their allowance linked to goals. Perhaps negotiate with your kids that if they complete their chores and get an A on their math quiz, parents will match their allowance. This gives kids the opportunity to hone their basic math skills while saving money. Those skills will come in handy when kids approach adulthood.
7. Be a smart shopper
Set aside some time to tag and download online coupons with your kids for the regular items you purchase each week. Have them add up the savings. This teaches kids to be thrifty and shows them how to stretch a dollar and comparison shop. When they want to buy a toy or treat, have them compare prices online to find the best deal.
8. Teach them to wait before buying
When your kids want to buy a new toy, designer sneakers or a game, discuss with them about waiting a couple weeks. Delayed gratification can sometimes result in a change of mind about the purchase. It is a good idea for adults too. Avoiding spur of the moment purchases may help everyone stick to a budget and really value the choices the family makes.
9. Track spending habits
Sometimes parents feel that they are constantly being asked for money. It may seem easy to just hand out cash, but what are you teaching your kids? Family Money lets parents deposit money directly through the app and allocate funds to the Vault or to the Card. From there kids can spend or save and parents are able to track purchases. By examining spending habits together with your kids, they may realize they are spending hundreds of dollars a month on online video games! Or that their daily coffee run costs more than they thought. Tracking purchases can help pinpoint where the money is going and identify areas where it could be saved.
10. Turn mistakes into learning opportunities
No one is perfect and everyone makes financial errors. When your kids spend too much, discuss what happened and turn it into a learning opportunity! Could they have waited another week to make that purchase, perhaps ask for more chores or help Mom or Dad organize the garage? Maybe a neighbor offered them a few dollars to weed the flower bed or mow the lawn? Are they turning down work when offered? Try to weave financial lessons into your everyday life. Understanding mistakes can turn a potential negative into a positive for the whole family.