Have you ever noticed how our lives revolve so much around money? It tends to define us – our homes, our clothes, our jobs, everything. Understanding and making financial decisions is key to determining what financial path you’ll lead. According to the ABA (American Bankers Association), children who receive financial literacy instruction during grades k-12 will have significantly higher savings, higher credit scores and greater net worth throughout their life.
April is Financial Literacy month and to honor the importance of being financially literate from a young age, Community Bank of the Chesapeake is sharing with you tips and insight to teach your children about money.
Don’t make money scary. This is one of the most important rules you can remember when teaching your child about money. Your child must learn and understand but they shouldn’t be afraid. They must learn to make mistakes with money, just like we can. For example, your child may want to buy a specific toy with their money and you know it would be a waste. Let them buy it anyways, sometimes they must acknowledge the lesson of why it was a bad decision for themselves.
- What you can do is show your children how to spend money within their means. Teach them to set a budget based on how much they’ve earned, received, payments and wants. Helping your child develop a money chart will set them on the right path to becoming financially aware.
Take them shopping. A great way to teach your child about money is to take them with you when you are making purchases, such as grocery shopping. While at the store, explain to them why you chose certain brands over others and help teach them control of spending, also known as “you can’t always get what you want.” When this is said, it is not meant as a “life’s not fair” lesson but to truly explain to your child the foundation of earned money, bills they must pay and how money left over must be divided cautiously.
- Set a budget with your child before you go to the store. Explain why you have a budget and why it is important to stick to that budget. While at the store, let your child make choices on some of the purchases to gauge how well they understand and to teach them responsibility.
Why do they ask? Teaching your children about money can be tricky. When your child throws a challenging question about money your way, it is good to ask “why do you ask?” This will let you know what they’ve already heard on the subject as well as what they think about it. However, when asking the question, be sure to keep your tone conversational and friendly.
- Understanding what your child thinks and has heard regarding money will help you develop ways to explain and build their knowledge.
Make it fun. While money is serious business, it is okay to make it fun! In fact it is a proven that kids learn and retain more information when it’s something they enjoy doing. Create games and activities to teach your child the importance of money. You can even use old fashion board games, like Monopoly or Life. Make your child be the banker and during the game discuss buying, selling, earning and more to help your child absorb the material while having a good time.
- Every kid loves the idea of putting money in their “piggy” bank but then they can no longer see their money. Try an alternate piggy bank and use a clear container. This way your child can watch their money grow, making it even more exciting to put money in every time. You could also create multiple containers for your child such as a savings, earning and spending bin. This will help teach your child the value of money.
Take a field trip. Take your child on a trip to the bank. This will help your child learn the basic transactions, deposits and more associated with a bank. It will also help them visually realize how the bank operates and what goes into protecting their finances.
- You should consider opening a bank account with your child. Show them where their money is held and explain how their money will build interest while in the bank. Community Bank of the Chesapeake offers an exciting Kid’s Club account for children to invest their money in as they join Fillip the Frog for adventures that helps teach them about money.
Above all, be open to discussing finances with your children on a regular basis. Kids are naturally curious about what they see their parents doing and that curiosity can be easily turned into teaching opportunities. Take advantage of these opportunities and by the time your child is ready to leave the nest, they will have a foundation to better prepare themselves for their financial future.