Teaching Financial Responsibility to Children
If you don’t teach your children how to be financially responsible, who will? Here are some pointers for sharing money management tips with your kids at any age.
Teaching Young Children About Money
- Consider giving preschoolers or kindergarteners a small allowance. Keep the money in a small glass jar so they can watch the savings grow.
- Let your children pick out and pay for a new toy with money from their allowance jar. Explain that if they earn $1 a week, they can afford a $5 toy in five weeks. Once enough money has accumulated, empty it, take it to the store together, and have your child hand the cash to the clerk. This practical experience is much more memorable than a lecture.
Helping Preteens Manage Money
- Give elementary and middle schoolers a “commission” where every chore they perform earns them a predetermined amount of money.
- Teach your children the concept of “opportunity cost.” In other words, if they spend their money on a video game, they won’t have any left for new shoes.
- Discourage impulse buys. If your preteen wants a new $20 dress, explain that she can use her well-earned commission money, but she should think it over for a day. If she still wants it just as badly tomorrow, you can return to the store together, and she can buy it then.
Showing Teens How to Spend & Save Wisely
- Open a student checking and savings account for teens. When you remain tied to the account as the responsible parent or guardian, you can continue monitoring your child’s spending and saving habits.
- Encourage teens to save a portion of their commissions (or money from a summer job) to start saving for college.
- Help your teen sign up for a credit card. Teach them that the best way to manage their money is never to spend more than they have in their bank account. While building credit is important, you may want to start with a debit card to get your child accustomed to swiping plastic without the risk of overspending.
- Talk about how you plan to pay for college. To keep costs down, encourage your teen to apply for a community college or trade school, seek scholarships and grants, and work part-time while going to school. Loans should only be considered if you have exhausted all other options.
- Show teens the basics of creating a budget. Even if they don’t have as many bills as an adult, you can help them balance their income with their expenses, such as car payments, car insurance, gas money, cell phone bills, and clothes.
If you’re ready to help your child open an account or credit card at GCS Credit Union, schedule an appointment with a team member to get started today. We’ll help you and your child find financial success through our services. For more information, please call us at (618) 797-7993 today.