How to Introduce Money Management to Your Child
Educating, motivating, and empowering children to become regular savers, smart spenders, and knowledgeable investors will help them become money-savvy adults. Introducing money management to your child should be fun and engaging, helping your child understand how to keep more of the money they earn and make smart choices with the money they spend.
Here are some simple ways to help educate your child about personal finance and managing money:
1) As soon as children can count, introduce them to money, whether it’s play money or the real thing.
2) When the right opportunities arise, communicate with your child about how to save, how to make money grow, and how to spend money wisely.
3) Give children the opportunity to earn an allowance, by placing a value on certain age-appropriate chores. This opens the door to talking with them about saving and spending their earnings.
4) Help children learn the differences between needs and wants, which will prepare them for making good spending decisions. Explain how allowance earnings and money received as a birthday gift can be saved up for a special purchase, such as clothing, a toy, or a bicycle. Some of these purchases may be needs and others (such as toys) are usually wants.
5) The concept of budgeting can be introduced as a way to save money for important purchases. Budgeting is a long-term concept and will require delayed gratification. Use an example from your household to help your child understand how you may have saved money for an important purchase such as a car, appliance, or vacation.
6) Use grocery shopping as a teaching opportunity. Explain how smart spending using coupons, buying sale items, and comparing prices increases savings, even when money must be spent to buy essentials.
7) When your child begins asking for money to spend, introduce goal-setting, and ways they can earn money to reach their goals.
8) Make saving and spending fun. Very young children can save using a piggy bank, while older children may be ready for an actual bank account. Take children to a credit union or bank to open their own savings accounts. Teaching children about spending and saving sets the course for life-long financial literacy.
9) Keep records of money saved, invested or spent. Using a simple computer spreadsheet, you can track your child’s savings and spending. There are also computer programs and apps that can help track banking and teach financial literacy. For younger children label 12 envelopes, one for each month of the year, and encourage your child to place receipts from all account deposits and purchases in monthly envelopes and keep notes on what they do with their money.
10) Allow your child to make spending decisions for the money they earn, so they will learn from their spending choices.
Children who develop a healthy relationship with money are more likely to take their good money habits into adulthood. Early education about finances is the most important step that a parent, grandparent or legal guardian can take to teach a child about money matters. When you feel the time is right, talk with your child about money and visit a Credit Union of Southern California (CU SoCal) branch office together. At CU SoCal, we’ll explain the features and benefits of CU SoCal Youth Accounts to help your child get started on their account.
CU SoCal Youth Account FAQs:
What is the age range for Youth Accounts at Credit Union of Southern California?
Youth Accounts are available for Members under the age of 18.
Are there any fees on Youth Savings Accounts?
No, all fees on Youth Savings accounts are waived.
Can my child get a checking account and debit card?
Yes! Youth Members are eligible to open checking accounts with a debit card. While age 12 or 13 is the typical age for kids to have their first checking account with debit card, we leave it to the parents’ discretion if they want to open a checking account with debit card for a younger child. Please note that Youth Members can open a free Classic Checking Account.
Is there a minimum opening balance required for Youth Accounts?
The standard $10 opening balance for new Share Savings Accounts will apply.
Please give us a call today at 866.287.6225 today to schedule a no-obligation Youth Account consultation with a CU SoCal Member Services specialist.