As parents, we all want the best for our children. We know it’s important for them to learn how to read and write so we send them to school and help them with their homework, but we often overlook the conversation about money. Children who learn the importance of smart money management early on will be better equipped to make smart financial decisions in the future. Here are some ideas to teach your kids about managing money.
Young children can truly benefit from a weekly allowance and the power to make their own financial decisions. Sit down with your child and encourage them to identify ways to earn money through age-appropriate chores. This helps your child learn that money does not grow on trees – it is earned through hard work.
In addition to working with their own money, you can also talk to your kids about your shopping plans. Allow your kids to help you find coupons, compare store prices and see how much can be saved during sales.
The Jar Approach
Label jars “saving,” “spending” and “sharing” or use different color lids for children too young to read. Then, help your children determine what they want to save for and come up with a plan for how much of the money they earn or receive should go into each jar. Over time, your child can watch the contents in the “savings” jar grow until they have enough for the desired item. If your child wants something immediate, like ice cream or a small toy, then discuss the “spending” jar and explain that what’s in the jar is what they have to spend now. The “sharing” jar is where funds are set aside to give to someone in need, support the community or a cause they care about. As kids get older you can refine this system by adding extra jars for more specific goals such as a car or college and consider opening a youth savings account to replace the jars.
To encourage saving, you could offer to match the funds your child saves for something he or she really wants. This is similar to a company-sponsored 401(k) and teaches them to maximize that opportunity.
Financial Manager for the Day
Put your child in charge of managing the money for a family restaurant meal, trip to a theme park or other family outing. Set a budget so there is a limit to stay within, then let your child research and allocate funds for the event. As an incentive to keep your child from overspending, you could let him or her keep the change.
Helping your kids create a budget and teaching them about money now, will significantly improve their chances of financial success in the future. Univest is here to help you and your children achieve your financial goals, contact us 877-723-5571 or visit www.univest.net to learn more about how we can help.
Univest Bank and Trust Co. is Member FDIC.