You don’t need to be ready to head out into the real world to learn about money. A strong education in how to handle money, pay bills and save money can begin in childhood and help prepare children for the future.
Open a savings account
Money management starts with strong practices from Day One. Open a savings account and a college fund for your child within their first year of life, and contribute (even small amounts) regularly. When your children are older, require them to contribute to these as well.
Require children to save some money
When children are young, it’s easy to place birthday money in the bank for them to have when they are older. But this practice doesn’t need to be abandoned when your kids are old enough to notice the $10 bill inside the birthday card. Instead of allowing children to spend all the money they receive or earn, require them to split their money three ways: a third for a college fund, a third for a savings account, and a third for spending. Children will quickly learn to spend wisely with what money they do have, or they’ll be disappointed with the results.
Discuss money saving tips
While children don’t need an in-depth understanding of your family’s finances, it is helpful for them to see their parents paying bills, discussing savings, retirement and college funds, and allocating additional income when it is received. Children learn their best money management practices from watching their parents, so don’t keep all the money talk behind closed doors. If you make and stick to a budget, children see and learn from that.
Encourage small part time jobs
While it isn’t always feasible for children to have an after school job, especially at the risk of hurting academic performance, some part-time jobs provide opportunities for children to learn about money. Babysitting, dog walking or a job at a summer camp are all ways that children can earn and learn to manage without taking the fun out of childhood.
Allowing children opportunities to spend and save money teaches them good money management practices from a young age. Encourage children to recognize money saving tips and demonstrate positive spending habits yourself. Parents who do these things are likely to have children who recognize the value of a dollar and the importance of saving from a young age.
