Teaching Your Kids About Money Management
It is not uncommon for children to mimic their parents' habits, including their financial habits. While finances can be a tricky topic, it is essential to talk to your children about money management. If you teach them the importance of budgeting, paying bills on time and setting aside money for savings, it’ll help your kids become responsible money managers. Here are some tips on how to get started!
- Start giving your kids a small allowance
- Allow spending in several budgeting categories (spending, short-term savings, charity of their choice)
- Increase dollar amounts with age
If your child is savings towards a specific goal, track the progress on a chart as they save to allow them to see how their savings are growing to meet their target.
Additionally, look for ways to make your kids comfortable with handling money. For example, have your children figure out the tip at a restaurant or ask them to sort out your grocery coupons and mail-in refund offers. You can also let them review any coupon apps on your phone to pick out any beneficial savings for your next shopping trip.
A part-time job
- Encourage part-time work for your teenagers who are old enough to work
- Educate them on important topics such income taxes, wage laws, hourly pay, etc.
- Make sure the job hours are flexible enough to not interfere with school and other extra-curriculars
- Guide them in spending and saving their earned money wisely
Savings, checking and credit for kids
- Help your kids set up a basic savings account early on – you can even set one up for them after they are born for safe saving, including any gift money from special occasions! Research your options online or talk to your bank about account options for minors.
- When they’re older and earning their own money, encourage them to consider a checking account and an ATM or debit card. A good first account may be one without a balance requirement or that offers perks like no overdraft fees. Please Note: Generally, children under 18 must have a parent or guardian listed on the account as well.
- Once they open an account, have them sign up for online banking to teach them how to monitor their balance, set account alerts and more so they understand how to stay on top of their finances
- Explain basic investment concepts when your teenagers reach high school.
- By age 18 or 19, educate your kids about the proper use of credit cards, good credit and free ways that they can keep track of their credit score.
Teaching your kids about wise money management will pay dividends for years to come.
Looking for guidance on how to teach your kids about money management? We are here to help! Talk to a Dollar Bank expert today.
This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.
Posted: September 04, 2020