Need some motivation for teaching your kids about money? Consider this: Parents who teach their children the value of money raise kids who successfully manage their own finances – and don’t become financial burdens to their parents!
When to Start
Children often develop an early fascination with money, so experts generally agree that the budgeting training wheels can come out as early as age three. They also agree that a good time to start an allowance is about the time kids enter first grade or as they learn to read.
Many bankers, including those employed by Nevada State Bank, volunteer their time to teach school children about the importance of budgeting and saving, and how the business world works. Find out if your child’s elementary school participates in financial education programs like Junior Achievement and “Teach Children to Save,” which was developed in cooperation with the American Bankers Association.
Lessons to Learn
As your children start earning and spending their own money, make sure they understand these classic lessons:
How to divvy it up – There are plenty of permutations, but the general idea behind “1-2-3 plans” or “bucket systems” is to break money down into three components: Save, Spend and Give. For example, your child might take a $5 allowance and put $2 in a “spend” jar, $2 in a “save” jar and $1 in a “give” jar. The take-home lesson is that when they work hard, they have some money to spend. But, at the same time, the “save” jar teaches them to delay gratification for a goal, while the “give” jar relates the importance of others.
Where money comes from – Involve your children when it comes time for a major household purchase. Explain how your family came up with the money for a new family car by taking an auto loan, for example. Show your kids how you saved $1,000 every month, and how that money grew to be the $20,000 you used to buy a new vehicle.
The importance of choices – When you give kids money for a school field trip or similar event, tell them they can spend it all – or save whatever they have left. At restaurants, show them how much a glass of soda costs and give them a choice between having the soda or receiving the money (and a glass of water!) instead.
How little things add up – If you fill a coin jar with pocket change at the end of the day, involve your children in watching it grow. Take the money to a coin counting machine or, better yet, have them roll the coins and accompany you to cash them in. They’ll be amazed at how small amounts can add up over time with the slow-and-steady approach.
How wealth is created – Games are a great way to make money lessons relevant. For example, with the free online Coffee Shop Game, kids try to make as much money as they can in 14 days by creating a successful business. Check it out at www.personalfinancejourney.com/2011/02/7-free-online-games-teach-kids-about-money/.
The importance of saving –When established early, the savings habit can become a lifelong way of managing money. Your children can open a Classic Savings account at Nevada State Bank with as little as $100. There are no monthly fees for accountholders under age 18. Visit today to learn more.
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