Helping children learn to spend, save or even share the money they receive as a gift or allowance can be a challenging task. At their young age, it's all the more difficult for them to master concepts that even some adults still struggle to understand. That doesn't mean it's impossible to teach them some fundamental ideas that will help them as they grow.
#1 Earning and Learning
When kids have an opportunity to earn their allowance through specialized tasks, they develop the understanding that there are rewards for good effort and work and a connection between skill development and career advancement. Showing them how their choices can influence whether they gain or lose resources like money reinforces the power their decisions can have on their plans.
Younger kids should be paid in cash the second they’ve accomplished the task so they can build a strong emotional link between work and reward. Older kids whose brains have more capacity to understand cause and effect should be set up with an account at a local credit union and have their money deposited into it, so they can experience the real-world effect of balances, statements, and direct deposit.
#2 Reliability and Responsibility
Participating in wage-earning activities that are appropriate for their age and ability is another excellent way to support good money habits. With the right adult guidance, they can open a lemonade stand or start a lawn-care business that not only gives them a chance to see what working for their wages feels like but can also help bring a neighborhood closer together. If they start a lawn-care business, in particular, scheduling and customer satisfaction factors into developing their work ethic and integrity.
#3 Spending and Saving Wisely
Establishing clear guidelines for spending habits and savings needs is a lesson that can never be too early to start but might be hard for a child of any age to understand. Parents can reflect careful decision-making skills by offering to match a child's savings to help cover the cost of a larger item or make wish lists and pick out purchases ahead of time to show appropriate planning skills. Low-fee personal savings accounts are a great way to teach your kids saving and budgeting.
#4 Satisfaction in Sharing
Teaching children to share toys can be difficult, and so can teaching them to share money, but it's one many families may find necessary when they want their children to learn about charity and generosity. Willing donations to help others or an important cause can give kids a sense of empowerment and compassion they'll need as adults.
#5 Finding Examples in Stories
Reading about other characters and families is an excellent way for children to learn how other people experience challenges and overcome them. This teaches empathy and understanding and helps put difficult concepts like money management in terms children will be able to understand. There are tons of books out there that will help kids of all ages learn more about money--and adults might find themselves learning some lessons as well.
Teach Your Kids Good Money Habits With First Alliance Credit Union
Responsible money management isn't easy for anyone to learn, but starting with basic principles at an early age, children can start to see money as a tool to help them enjoy life to its fullest instead of a toy.
You can also help teach your kids good money habits with the resources First Alliance Credit Union provides. Help your child become a First Alliance Credit Union member today and help them deposit money in their own Youth or Teen savings account, or even get their own Certificate of Deposit (CD) to earn more interest on their money.
Want to know more about teaching your kids good money habits? Check out this video from KIMT News 3, featuring our Lending Advisor, Hayley Howard.