Essential Money Lessons Every Child Should Learn
If you’re a parent, you probably understand the feeling of wanting the absolute best for your child. That doesn’t necessarily mean you want them to have the top brands in clothing or the latest toys or electronics, but it could just mean you want them to be safe and secure by laying a foundation they can build upon to do well in life. One of the best ways to provide a solid foundation for your child is by teaching them essential lessons in money management. It stands to reason that the earlier in life lessons are taught, the more time one has to thoroughly gain understanding. We’re here to provide you with some of the most essential money lessons every child should learn to get them on the path to a bright financial future.
Let Them Earn an Allowance
An allowance can be so much more than just handing your child ten dollars here and there; it can provide an excellent lesson in money management. Assign your child tasks to complete outside of their normal routine such as helping take out the trash, sweeping, dusting, etc. Once they complete these tasks, you can reward them with their allowance. This not only allows your child to start earning money that they can learn to save with, but it also teaches one of the most important financial lessons – money doesn’t grow on trees, you have to earn it! Establishing an allowance for your child will truly teach them the value of money, because in order to get the things we want, sometimes we have to be willing to put in a little extra work for it.
Teach Them How to Budget
Once your child is earning a regular allowance, it’s important to start explaining the ins and outs of spending and saving. You can help your child get in the habit of saving by giving them a piggy bank or change jar where they can deposit coins or cash. Start by helping them establish a small savings goal, such as saving for a new toy or video game they have been wanting. They will need to determine how much of their earned allowance will be designated toward their savings goal. Encouraging your child to set short-term goals when they are young helps them learn the value of delayed gratification. As they get older, they will be able to save for longer-term goals such as buying a car or paying for college.
Teach Them to Track Their Spending
Now that your child has a good understanding of how money is earned, used, and saved, you can start trying to help them make smart spending decisions. Here at Robins Financial, we offer accounts for all ages that can help your child learn to track their spending. Once they learn the value of money and what it takes to earn the money they need, tracking their transaction history can help keep them from spending their funds so quickly. If you’re interested in opening their account, you can call, schedule an appointment, or open a youth account online. At this age, they may not have many bills (if any) to pay for, but teaching your child how to monitor their spending can help them make strong financial decisions later down the road.
Have a Talk About Credit
One of the most important conversations you can have with your child is about credit. Credit is a huge factor that can shape their finances in the future, so it’s important to start introducing the topic at a young age. Teach your child about credit cards and how to use them responsibly. Let them know that it’s not just free money they can use whenever they please. It’s important for them to understand that using credit cards responsibly will help teens establish good credit history, which is important for future needs like renting an apartment or getting a good rate on an auto or mortgage loan. They need to understand that accumulating debt can be detrimental to their future and should be avoided. Introducing these financial concepts early to your child can instill positive behaviors and decision-making skills.
Model Good Financial Behavior
Just as important as the lessons you teach your children about money are the ways you discuss and handle money when you’re around them. Like it or not, your kids keep a very keen eye on everything you do. Lead by example by showing them how to make smart financial decisions and involve them in your own plans. If you want your children to develop good spending and saving habits, they need to see you making smart spending and saving choices.
The Bottom Line
Being a positive, guiding force in your child’s life and teaching them these basic financial skills will carry them into adulthood with a solid understanding of how to make it on their own. Educating your children about personal finance is a process that can take time, but if you put in the effort and continuously communicate a clear message about money, you will instill good habits that will serve your children well. We believe that every member, no matter their age, should be equipped with the tools they need to financially succeed and we’re here to guide you every step of the way.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.