It is never too early to start teaching your children about money and personal finances. Of course as a parent you want your children to be smart about managing their money. But for some parents, talking about money can be very difficult.
In 2016, the average American household had $134,643 in debt.[i] Help guide your children toward the path to financial success by talking to them about money and personal finances while they’re still young. Here are some ways that you can start teaching your children about financial literacy today.
Lead by Example
As a parent, there are plenty of real-life financial scenarios that you can use to teach your children. Your child can begin to develop financial habits starting as early as the age of six, with many of those coming from watching what you do.[ii] Talk to your children as you go about your daily activities and explain to them why you are making certain financial decisions.
For small children, their financial habits may begin to form through discussions of your purchases at the grocery store. Let your kids help you make the grocery list and look at prices throughout the store to make sure you stay on budget.
As your children reach their teens, it is time to start discussing larger financial issues. Walk them through your thought process as you shop for a new car loan, home mortgage, or low-interest credit card. Teaching them how searching for the lowest interest rates can result in big savings may be one of the most important lessons for their financial future.
If you aren’t the most financially savvy individual, you can use this opportunity to transform your own spending habits as you teach your children about money.
Understanding the Concept of Money
One of the easiest ways to teach your children the value of a dollar is by giving them their own money to spend. Handling their own money can help children learn from their mistakes and teach them to save for items that they really want.
Start by giving a few dollars to your younger children when you go shopping. When they have found an item they want to buy, take the time to offer guidance and advice while still giving them a little freedom to make their own selections.
Many children will rush to spend their money on the first thing they find and wish they had that money later when they stumble across something they want even more. Take this opportunity to teach them about thinking through their purchases. Learning to avoid impulse purchases at a young age could end up saving them thousands or even tens of thousands of dollars over their lifetimes.
Take It to the Bank
Many kids have a piggy bank. Switch out that piggy bank for a glass container so that your kids can watch their money grow. Put any cash they receive for birthdays, change found lying around the house, and allowance they earn into their jar. Not only will the jar help small children learn to save, but it is also a great opportunity to teach them how to count money as you monitor their savings.
As your children become teenagers, the glass savings jar may not cut it any longer. Children who are making money doing chores around the house or by babysitting for the neighbors may be ready to have a checking account of their own. But don’t worry; a parent must open the account for the teenager, which will provide you with numerous opportunities to continue educating your child.
A teen checking account does not have the fees and high minimum balances associated with some other checking accounts. It will also provide your teen children with their first debit card. Teach them how to monitor their spending and deposits through their online banking portal. You can also work with your teen children to set up a budget so that they can begin saving for college or their first car.
Start Teaching Your Teen about Financial Literacy
You don’t need to be a financial whiz to start teaching your child about money. Starting the conversation early about financial basics will make it easier to talk to your children about more complex topics as they get older.
In the meanwhile, if you would like further information about First Checking, the joint checking account from Bank of Internet USA created to help teach teens real life money management skills, please contact us by telephone at 1-877-541-2634 or by email at firstname.lastname@example.org.