For most of your adult life, you’ve had to deal with spending, budgeting, and saving. Now comes the fun part: teaching your children how important it is to be smart with their money! Starting to teach these lessons at a young age will help your children build smart money habits that will stick with them for the rest of their lives. Here are seven tips that can help you teach your children the importance of budgeting and saving:
1. Start Early
Even when a child is very young, there are everyday moments you can take advantage of to teach them about money. For example, when you pay for something at a store, count out the money with your child or let them pay the cashier. Additionally, give them a piggy bank to begin learning about saving, or better yet, a clear jar so they can see the money growing. Eventually, let your children buy a toy they want with their savings.
2. Take a Trip to the Bank
Opening a savings account for your child and making regular deposits from birthday or holiday money, allowances and more can help teach them the importance of saving. Additionally, as the account balance grows, you can start discussing the concept of interest with your child. Discuss how the longer you keep your money in a savings account, and the more money you deposit, the more interest you will earn.
3. Set a Good Example
You are your child’s first teacher, so always be on the lookout for lessons from your own experiences. Talk to them about the reasons you save, spending decisions, and why these things are so important. Also, don’t be afraid to discuss money mistakes you’ve made in the past to help them avoid doing the same thing.
4. Introduce the Responsibility of Spending
When children reach their teenage years, consider opening a joint checking account and getting them a debit card that is linked to the account. This way you can guide them in building responsible and safe money use practices. When they’re really ready for more responsibility, you can help them set up a credit card. Explain that the key to a credit card is to have enough money to pay off the full amount due on time each month. These are all steps that can serve as lessons in managing and monitoring their own funds.
5. Create a Budget and Track Spending
Now that they’re putting money into the bank, teach them the importance of budgeting what they have. Depending on your child and their age, consider letting them use one of the great apps that can be downloaded on their smartphone to assist with budgeting and tracking expenditures. If you prefer, start by introducing the envelope strategy, where you divide your expenses into budgeted categories and set aside designated envelopes of cash for each one. This will show young kids exactly what their money is going toward. Establish the concept of pay yourself first by making saving a category on their budget so they build a habit of saving before spending.
6. Go Paperless, Use a Banking App
There’s an app for everything, even the bank! Burke & Herbert Bank has free Mobile Banking apps for iPhone®, iPad® and Android™ that make it easy to quickly check balances, view recent transactions, pay bills, transfer funds, and of course, deposit checks right from your phone or tablet. This will let your child have their banking right in the palm of their hand (and means no more excuses for not being on top of their money situation!).
7. Keep the Conversation Going
Continue to talk about the importance of saving and budgeting as long as you can. As your children get older, they will have new financial responsibilities and with those will come new questions. You can eventually help them when it comes to taxes, credit reports, mortgages, and even starting retirement plans. The most important thing is that you start this conversation early so that your children establish smart money habits at an early age.