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Whether you’re teaching finances to your kids, your grandkids, or those of a loved one, it’s absolutely essential to teach children how to manage the money they have and invest for the future.

Spending

An understanding of spending, including the ability to budget for and track it, is perhaps the most essential money skill you can teach to a child. Children need to recognize that purchases cost money. They can’t just buy everything they want, they must plan ahead so that they can afford everything they need. This is why a budget is a necessity. It’s important to acknowledge that budgeting always involves making adjustments.

Spending Activities

Spending Simulation: For younger kids, you can simulate the experience of spending to teach them about tradeoffs. Give your child some money (maybe $5) and set up a small, at-home store. The store could include one item that will cost the whole $5, a few between $2 and $3, and multiple small things for $1 or less. These items can be small toys, treats, or even “coupons” for extra time playing games or a movie night. The point isn’t what they're buying, but that the child recognizes that they can’t get everything, they’ll have to prioritize what they want most.

Saving

It’s important for children to understand that saving is the secret to getting what they want. In order to do that, they need to recognize the difference between saving - and saving with a purpose. When it comes to the actual act of saving, teach that creating (and sticking to) goals is key. They may choose to save a regular percentage of their money or a certain amount each month. As an incentive to focus on saving, consider making a matching contribution by adding 50 cents for every dollar your child saves.

Saving Activities

Open a Savings Account: Take a trip to Fairmont FCU and help your child open their first savings account. You can even ask one of our experts to explain how interest works and why it’s wise to store your money in certain accounts. Encourage your child to ask questions about credit unions and how they work. You may even choose to contribute a little to help get their savings started. Remember, the child needs to learn how important it is to regularly add money to the account.

Create a Savings Goal: Help your child set a saving goal. Children's goals vary a ton based on their age, but might include toys, sports equipment, electronic devices, special clothes, or other big-ticket items. Let them discover for themselves that not all goals are worth the time and effort it takes to reach them. Opening a Youth Savings Club is a great way to get started. Making deposits will remind them of their goal and give you both the chance to celebrate progress.

Keep Teaching

These topics and activities are meant to help your child form a foundation of financial literacy. Once your child begins to master these topics, expand to others. You could teach about the 3 jar method, the 50/30/20 rule, and more! What’s most important is that you keep an open conversation with your child about money and the importance of managing it carefully.

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https://fairmontfcu.banzai.org/wellness/resources/teaching-children-about-money