TEACHING KIDS GOOD FINANCIAL HABITS

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1 TEACHING KIDS GOOD FINANCIAL HABITS It s never too early to start

2 Young children Children as young as 5 can understand saving and spending and sharing. Create 3 glass jars with those labels. When your child receives money for Christmas, birthdays or allowance, have the child divide the money into these jars. Some for spending now, some to save for a future purchase and some to give to a good cause. They can see the money grow in the jars and make decisions about how to spend it. Talk to your children about delayed gratification. We can t always have what we want when we want it. Help your child set some goal for their savings jar. They can see that it s important to be patient and wait for something they are saving for.

3 Young children Talk to your child about how to share their money. Even 5 year olds know that there are people in need of help, or animal shelters in need of food. It s good for them to know that even though they re little, they can help others in need.

4 Older children ages 6-12 You are your child s best teacher when it comes to good financial habits. You can teach them how to handle money effectively and how to develop good personal financial skills. This is the time to help them learn to make good choices. Money is finite and when it s gone, it s gone. It s also good to learn from mistakes. If your child has money to spend and blows it all on something they later regret, lesson learned. Let your child see that you are thoughtful about spending and saving money. When you re in the grocery store you can talk about looking for good value for your money, using coupons etc. Have conversations about how you save for future items such as a family vacation. Maybe they want a large-ticket item and you need to use that money for vacation; explain that there s a reason you are not buying out the game aisle.

5 Younger children ages 6-12 Choose your words carefully and keep your message positive. We often say No, we can t afford that. We don t want to worry our children. We want them to know that we can and will take care of them and provide for them. Maybe we could say No, we can t buy that now. We can talk about how you can save for it. You can say That s not how we choose to spend our money right now. Show them how you make good financial decisions. Ask the questions Do we really need this right now? Would it cost less somewhere else? Is it something I could borrow? If I wait a week, will I still want this item?

6 Teens Again, you are going to be your teen s best money teacher. They may not agree, but be strong and hang in there! If you haven t already opened a savings account for your child, now is that time. If they are older and have a part-time job they may need a checking account and a debit card. Be sure to keep the conversation open about making good financial decisions. It doesn t have to be a lecture, just choose your time and try to get some advice in when you can. If you see that they re spending $2 every day for snacks at school, show them that if they add that up they re spending $40 a month that could maybe go towards that pair of shoes or that computer game or whatever that they ve been wanting. If your teen is working part-time, help him or her budget for the items they need to pay for. Maybe you will require they pay for their phone, or car insurance. Show them how to set aside money from each paycheck so they have the amount when it s due.

7 Teens: debit and credit cards When your teen is ready for a checking account and debit card, it s probably a good idea to be on the account with him or her. It gives another pair of eyes if they need help. This is a great time to teach your teen how to keep and balance a checkbook, and how to use the debit card wisely. Teach your teen to be aware of how much money is being deposited and how much they are spending. It s so easy to swipe that debit card. It s a lot harder when you do that without knowing your checking balance, and have to pay overdraft fees. Keep up the saving spending sharing ideas. They can set aside money in a savings account for more long-term needs. Encourage them to think before they spend Do I need this now? Can I do without it?

8 Teens: debit and credit cards When your older teen is working and planning for life after high school, a credit card with a low credit limit may be a good tool. Or not. That depends on you and your teen. Talk to your teens about using credit responsibly and about how important a good credit score will be to them. If they will be renting an apartment or buying a car, they will need good credit. Unfortunately sometimes no credit is as harmful as bad credit. Talk to your teen about using the credit card but paying off the balance in full each month. Help them understand how easy it is to swipe that card and how hard it is to actually pay for what you have bought.

9 Questions