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How to Teach Children Good Money Habits

Monday, July 25, 2016 - 01:00

Many adults today weren't taught much about personal finances when we were young. But those with children should start teaching their kids smart money habits as early as possible. Kids with a solid base of personal finance knowledge stand a better chance of being financially stable. Here are ways to get started with your children:

Start Early

  • Show young children how to sort coins
  • Play money games together
  • Start saving change in a piggy bank so they can see and hear it grow
  • Visit a credit union or bank to open a savings account

Give Allowances on a Regular Basis

  • Pay a base amount of allowance unconditionally  (-Suggested amount is half of their age each week, e.g. age 5=$2.50/week or $10/month)
  • Make a list of  chores they can do to earn more money
  • Help them brainstorm realistic ways to earn more money

Make Saving a Habit

  • Pay allowance in quarters: use 1/4 to save, 1/4 to give, and 1/2 to spend
  • Use the same amounts above if your child receives a large monetary gift
  • Once a month take your child to your credit union or bank to make a deposit into their savings account
  • Once a month take a trip with your child to make a donation to a local charity. If money is tight, think about donating time instead.

Encourage Goal-Setting

  • Have kids make a wish list of things they want to buy, do, or donate, including the cost/amount and how long they will need to save to meet their goals
  • Consider matching their savings to keep your kids motivated and to help reach their targets
  • Remember the power of ownership: kids take better care of things they buy with their own money

Teach Particular Skills to Older Children

  • Encourage older teens to get a part-time job
  • Encourage them to save at least 1/4 of any allowance, monetary gifts, or other income while their expenses are minimal
  • Teach responsibility by having teens pay for part or all of their own expenses, like clothing, cell phone, entertainment, car insurance, etc. from allowance or part time job income
  • If they run out of money and ask you for some, teach them limits and that when the money is gone, it's gone
  • Teach them how to comparison shop for the best price and quality
  • Teach your teen how to prioritize spending - the result may be less financial pressure on you as a parent now and down the road as your teen's spending habits improve

For more info, check out "Boomerang kids cramping your lifestyle?" 

If you're looking for a little financial help, LSS is here. We can help you achieve your financial goals whether you want to manage your credit cards, navigate your student loans, improve your credit, create a realistic spending plan, or build up savings. Give us a call today at 888.577.2227 for your free financial counseling session. Or, click here to get started online at your convenience. Take action to create a better financial future for you and your family.