Financial Lessons for Children of All Ages
Posted
on Tuesday, April 9, 2024
in
Financial Education
The entire month of April is celebrated as Financial Literacy Month. The week of April 8-12 is also recognized as National America Saves Week. In celebration of these two events, now is a great time to introduce your children to financial lessons.
Whether your children are young or old, it’s never too early or too late to introduce them to financial concepts. Here are six financial lessons perfect for children of all ages.
Going to the bank.
Younger: When visiting the bank, explain to young ones how banks are a safe place to hold your money, much like their piggy bank at home. Encourage saving money by opening a savings account for them, and regularly deposit some of their extra money they received from their birthdays or allowances. Don’t forget to pick up a sticker or sucker from the tellers!
Older: When visiting the bank with older children, explain credits and debits by teaching them how to fill out deposit and withdrawal slips. When your teenager begins working, consider opening a checking account for them so they can begin to manage their own money with parents’ assistance.
Budgeting on payday and paying bills.
Younger: When you’re budgeting, involve your kids by explaining the “wants” and “needs” adult must allocate for when budgeting their money. Especially when money is tight, it’s important for children to understand that needs, such as rent, electricity, water, and groceries, must come before wants.
Older: Once you receive your monthly bank and card statements and begin budgeting, consider involving your older kids in a more in-depth lesson about “needs” and “wants.” Explain how the electricity bill is calculated monthly, how interest is compounded on the mortgage, and how you carefully track your spending to maximize the family’s grocery budget. Involve them when you compare your check book to your monthly bank statement and teach them how to resolve any disparities.
Shopping at the grocery store.
Younger: Like when you’re budgeting on payday, “needs” and “wants” must also be identified on your grocery list. Meat, dairy, fruits, and vegetables, among other items, are necessary for eating a balanced diet. Sodas, desserts, and candies are extra “wants” that may not fit within the budget. Also consider discussing the differences between store- and name-brand items.
Older: Challenge your young adult to help you with grocery shopping by asking them to plan a few meals for the week. Have them make a list of all the ingredients, then make a shopping list, go to the store, and purchase the items. During this activity, they’ll be challenged to compare store- and name-brands and repurpose items for different recipes (for example, plan two recipes that use tomato sauce so they can buy one large can). If they succeed, congratulate them on a job well done, and if not, give them pointers for ways to stay under budget in the future.
Assigning chores and giving allowances.
Younger: If your kids are constantly begging for the newest toys or gadgets, it may be time to implement chores that allow them to earn money toward those items. Help them define a goal that they want to work toward, then structure a system for how they’ll be paid for the chores. A chore chart that defines how much each job is worth may be a suitable option. Explain that, like in the real world, when people work, they are paid, and when they don’t work, they’re not paid. This will encourage children to work hard for something that they want to earn.
Older: Chore charts may be less useful for young adults, but the principle is still the same as you teach them to be responsible for their own independent tasks. Combine independent chores with chores that are split between all family members. Independent chores may include making their bed, doing their laundry, and cleaning their rooms. Family chores like doing the dishes, cleaning the floors, and cleaning the bathroom may be periodic chores split among family members.
Using credit cards.
Younger: Credit cards can be a useful tool when you used correctly, but they can be detrimental to your financial future if used incorrectly. Teach smart credit card use by explaining the rewards that come from proper credit card use, but also emphasize the negative consequences that come from improper use of credit cards.
Older: As your teenagers near the age of 18 where they’ll be eligible to apply for a credit card, remind them to be careful as they use credit. Credit cards don’t provide free money to recklessly spend—it is a loan that must be paid back, oftentimes with incredible amounts of interest when used negligibly. Explain to your teenager that credit cards can be useful tools for smart financial managers but be cautious to introduce them slowly as to not encourage reckless spending and a credit disaster.
Planning a vacation.
Younger: Planning a vacation can be stressful between balancing budgets and busy schedules. If you’re traveling this summer, consider involving your little ones when planning your trip. Explain all the different considerations you make when budgeting your trip—driving or flying, eating fast food or dining at luxurious restaurants, staying at a hotel or staying with a relative. While some options may be preferable to others, it’s nearly impossible to fit them all within a tight budget.
Older: Stir-crazy teenagers may be begging to go on a vacation this summer, but they may not understand the cost that goes into planning such a trip. If you’re planning a trip soon, give them a destination, time frame, and budget and challenge them to plan a trip while staying under budget. Remind them to consider meals, lodging, travel cost, attractions, and other expenses that may pop up. If they’re able to stay under budget, consider taking the planned trip as their reward for thrifty planning.
More Information
Finances prove to be a complex lesson to teach the children in your life, but by starting young, you can teach them a value of a dollar and encourage them to start saving toward their future. Involving children in your own financial planning exposes them to the challenges of budgeting for many of life challenges and prepares them for the day they’ll begin managing their own finances.
For more information about United Bank & Trust, stop in or call us at (641) 753-5900.