Every parent has been there. You’re halfway through your shopping trip and your child spots a “must-have” playset or action figure in the toy aisle. In your heart, you want nothing more than to see their face light up as you take it off the shelf, but you know already that it’s just one more unplanned expense you’ll need to squeeze into your monthly budget.
Tough choice or teachable moment? In this blog, we look at the realities of teaching financial responsibility and good money skills to young children. We’ll explore why kids must learn to save up for the things they want, and why it’s critical to teach financial management and even basic budgeting skills to children.
Read on to learn how to turn your toy aisle tantrums into valuable money lessons.
Financial literacy is a set of learned skills that everyone needs to manage money successfully. Learning the fundamentals of financial literacy early can set your child up for a lifetime of wise money management and increasing financial prosperity.
Every financial journey starts with learning about the importance of saving, how to do it, and how to distinguish between needs and once. From there we continue to learn increasingly sophisticated skills to manage money and make and keep a budget.
Introducing your kids to the realities of money management takes discipline and practice, but teaching children to prioritize their needs over their wants is a crucial first step toward lifelong financial success.
Set your kids on the right path by teaching them early that financial resources are always limited, and that it’s often necessary to plan ahead and save for the things we want in life. Saving not only builds financial discipline, it gives your child a sense of financial security and helps build confidence in their ability to manage their financial future.
Start by allowing your child to decide how to allocate birthday money or a small monthly allowance. They’ll learn quickly that the money they have will rarely cover everything they want, and they might have to wait a month or two to get a particularly treasured item.
Opening a youth savings account is a great way to make money management a concrete skill. You’ll teach the critical disciplines of regularly depositing savings, monitoring their balance, and deciding when to withdraw money to spend it. They’ll also see deposited savings grow over time, which is a great introduction to the power of compounding interest!
Once you’ve introduced the concepts of savings and opened a youth savings account, you’re ready to start broadening your child’s understanding of how financial management works. Here are some great ways to get started.
Start by paying an allowance in exchange for completing specified chores around the house. By teaching that money takes effort to earn, you’ll instill respect for the value of money. When children begin to earn their own money, they’ll feel an added incentive to manage it properly.
Show your child how you save money as part of your own financial management, such as planning for a vacation or theme park trip or saving for an item that you desire. Your child will feel more engaged with the family’s finances and enjoy being involved in important family financial decisions.
Choose age-appropriate games and activities that simulate real-life money issues. Many classic board games like Monopoly®, The Game of Life®, and Cover Your Assets® require financial planning and real-time decision-making that will teach your child about the consequences of their actions.
There’s no shortage of online resources and digital apps designed to help teach children about savings and money management.
Popular choices for young children include:
For older children and teens consider:
Budgeting involves balancing several competing financial priorities against one another while not spending more than you have. The easiest way to teach this critical skill is by doing. Here are some practical ways to take saving money to the next level.
Let your child help you set spending and savings goals as part of your monthly or annual budget planning and update them regularly on progress. Give them a sense of ownership in the family finances and an understanding of the importance of goal-setting.
Make budgeting a part of your everyday activities. For example, give your child a small budget for grocery shopping or planning a family outing. Let them make decisions on how to allocate the money, teaching them to prioritize and make informed choices.
Challenge your kids to plan spending. Play games with beads, counters, or leftover Halloween candy, asking them to allocate this “income” to different priorities including savings, spending, and giving. Once you’ve taught the concept, ask them to do the same with their allowance.
Start a simplified spreadsheet using your child’s allowance or part of your own. Add in formulas so changes to amounts are reflected instantly across the budget. Although it’s not for all kids, many children will appreciate seeing how spending in one area affects your options in others.
Kids grow fast. Get ahead of the game by teaching them critical saving, budgeting, and money management skills early.
At Foothill Credit Union, we understand the importance of starting to save and learn good money habits. That’s why we offer a range of savings accounts designed to help kids level up their financial skills at every stage of their journey to adulthood.
All Foothill youth savings accounts feature:
Our Moneyland Account is a great place to start. Designed for children eight years and younger, a Moneyland account enables your child to stash the cash they receive from birthday gifts, weekly allowance, and maybe even the Tooth Fairy.
A Moneyland Account lets your child:
To be eligible for an account, children must be the dependent of an adult who meets the requirements for membership of Foothill Credit Union. A parent or guardian acts as joint owner and provides the child's Social Security Number.
You can open an account by visiting one of our branches and talking to our helpful staff. You’ll find Foothill Credit Union branches in Arcadia, Covina, and Glendora, in the San Gabriel Valley. Come on in today, or click below to learn more about our range of youth savings accounts.
