Your tween opens a birthday card and is thrilled to find a few dollars from a relative hidden in it. But what’s next? Do you share with your children how to save, share, and spend the money mindfully?
Many adults do not think about having these conversations with their children. Still, even a little guide in their younger years can turn them into adventurous entrepreneurs, financially responsible adults, and caring community members who donate to nonprofits.
Here are six ways you can encourage positive money habits in your children.
1. Let children follow their passions, and pennies will follow
Michelle Sulek, senior community development officer at Elevations Credit Union, says teaching children about financial literacy at a young age can help increase their earning potential and develop financial responsibility as they grow.
“I think an essential part of teaching children is making it a priority to invest in themselves and their skills, education and skills so that they can make money and then invest it wisely,” commented Sulek. “I love when children can indulge their passion and use their talents and skills to earn more and learn more. It prepares them for better success in life. ”
Encourage lemonade stands. Let your child sell a few full-blown clothes in your rummage shop. Get excited about a new craft hobby – and sell it online. These passionate moments will not only help your child hone their innate abilities, but will also help them learn how what they do best can be turned into hobby money or even a future career path.
2. Help children open their own savings accounts
Did you know Elevations Credit Union has a Rags to Riches program that allows children under the age of 12 to open their own savings account with a co-owner? After their 13th birthday, they can add a checking account.
Seven-year-old Ivy opened her Rags to Riches account in Fort Collins this summer. Her first deposit included the money for the tooth fairy and the weekly pocket money she earned by helping clean the floor at home.
Her mother, Olivia, says Ivy loved visiting the credit union and is currently saving her money to buy more plush toys. “Ivy makes $ 5 a week in pocket money. I gave her cash every week and she put the money in several piggy banks in her room. Now that your money is in a savings account, we have agreed that I will transfer money to your account every month. ”
This process is an educational moment to show our tech-savvy kids how electronic payments and transfers between accounts – or future bills – work as they grow up.
For legal guardians considering bringing their children to open an account, you will be pleased to know that the credit union includes three pouches for your child to stash their money in until it comes to the deposit. The colorful bags are marked “Save”, “Spend” and “Share” to help children understand that money can be used in different ways. Olivia also shares that parents must bring the child’s Social Security card and ask them to come up with an oral password for their savings account – two more tasks they will have to work on together!
Scott Herrmann, a CFS * Wealth Management Advisor at Elevations, agrees that saving is a key skill that children need to learn early on. “Saving money is one of the best ways to empower your children. If they have money, they have opportunities. If they can grow their money, they have more options, ”he explained.
3. Enroll children in educational programs
It takes a village to raise our children, and financial education programs in our community can make all the difference for our youth. Junior Achievement-Rocky Mountain, Inc. (JA) and Elevations Credit Union’s RealityCheck for Youth are both offered at most front range schools.
Herrmann volunteers at JA in the Boulder Valley School District, where kids gain hands-on experience managing fictional work and making career and life choices in fun, insightful scenarios that prepare them for future decisions with real money.
“One of my favorite JA units is budgeting. Children in the middle or high school get a family situation with a job, gross and net wages and payment options for accommodation, food, transport, fun, etc. ”, explains Herrmann. “The only rule is that they can’t spend more than they make – and they may want to eat every now and then. Then they have to make it work. ”
Founded in 2013 by Elevations Credit Union, RealityCheck for Youth is now the # 1 credit union in Colorado reaching students in classrooms with financial literacy presentations as rated by the National Youth Involvement Board.
Sheli Emerick, Registered Associate in Wealth Management Services at Elevations, explains that RealityCheck for Youth is a volunteer organization that connects with schools and other like-minded nonprofits to provide financial education to our youth.
The curriculum covers everything from basic coin counting and identifying cash to setting up a budget, understanding how to save money, how loans and interest rates work, investing, entrepreneurship, and much more.
“It is important that children learn the difference between wants and needs, the value of saving over time, and the confidence to contribute early on,” added Emerick.
4. Establish a points system to make money
Your children are likely to be helping out with basic household chores. As adults, we know that this encourages responsibility and good habits. Monetize now! Sulek says she did this with her children when they were younger by creating a points system that used pennies to determine if they were making their maternity leave.
“I had a housework can for my children. When they had done their four to five daily chores, I had them toss four to five pfennigs into the jar. At the end of the week we’d add them up. Then they would make money, ”she explained. “We’d take it to Elevations and they’d put it into their account and get a reward from the friendly cashiers.”
Sulek says that real jobs (through age-appropriate tasks) like these teach kids where and how to make money. And we all know that kids like to ask for money, so why not let them earn it?
5. Let your child work through an actual buying decision
After your child has made a few dollars on their own, attended a class, and maybe even opened their first savings account, put them to the test. Herrmann suggests asking your child to help with a big purchase they asked for, such as a bike or a video game.
“Children are naturally creative. It helps to let them start making financial decisions at a young age and see the consequences, ”he said. “When a child wants something instead of telling him ‘No, you can’t have that.’ Tell them ‘Sure you can.‘If necessary, set limits and let them decide. For example, I remember a day when my son (at that time still in elementary school) wanted to buy a rather expensive LEGO set from Target. ”
Herrmann says the conversation and the teachable moment went something like this:
Child: Dad, can I get this?
Parent: Sure, you can. How much does it cost?
Child: It’s $ 130.
Parent: I see. How much do you have?
Child: $ 30.
Parent: Hmmm, how much more do you need?
Child: $ 100.
Parent: Okay, where can you get the extra money?
As a legal guardian, you can offer to pay a higher share of the costs or give the child the opportunity to raise the remaining money. They can ask if they can take on additional duties to make extra pocket money, withdraw money from their savings account, or take out a loan until they get their birthday money.
Sometimes the child will find a way to buy the item and sometimes they will choose a similar but less expensive option or decide that it is not something they want or need and forego the purchase altogether. These options become valuable, low-cost lessons to prepare you for more important life decisions, such as buying a car loan or mortgage.
6. Have money discussions with your children
Talking about income and debt shouldn’t be taboo. Including children in household chats about saving for a vacation or an unexpected bill can help them learn even more about making, saving, and spending money, and the differences between wants and needs.
“It’s also important that parents have open and honest conversations with their children about mistakes they’ve made, and if they had learned more about finances, they might not have made those mistakes,” noted Sulek.
Make sure your children are aware of late payment bills or credit charges. You can practice this by lending your child money to buy something and telling them that they will be responsible and they will have to pay you back if they get their pocket money. A small late fee will be charged for each day that payment is late. Your child will realize that the later they are paying, the more they will pay. Children tend to learn quickly that they don’t like parting with their hard-earned money.
You are not alone in teaching your children responsible ways to make money, save, and spend. The next time you visit your preferred Elevations store, ask the cashier for more details on opening an account for your child. Or, contact your child’s teachers to see if Junior Achievement or RealityCheck for Youth is on the curriculum during the school year. It is never too early to teach our children – and ourselves – how to handle money.
Here is a list of upcoming events and seminars hosted by the Elevations team that may be helpful for you, even as an adult, to further develop your financial education.