The start of school presents a great opportunity to show your children the value of money and help them develop good saving habits. Being smart with money doesn’t always come easily; it’s important to instill a money-minded mentality at an early age.
The professionals at Broussard Poché, LLP have a suggestion. This year, take your young student school supply shopping with you. Let them watch how items can add up in the cart and explain why it’s important to keep an eye on the prices. Take the opportunity to teach them how your family makes money and why it’s important to save hard-earned cash for school supplies. It will be an eye-opening experience for them. Most young children think money appears from “nowhere!”
Here are a few more tips to teaching kids good saving habits early.
Your child, from the age of 3, can start to understand how money works and what it means to be smart with funds.
- They model behavior, if they see mom and dad being smart with money, they will notice
- Help them learn to identify coins and paper money and notice their value
- Buy a bank and let them place gift money in the bank
- When they ask for a toy or treat, say things like, “We’ll have to save for that, maybe next time”
- Consider a weekly allowance for chores, so they can learn how money is earned
This is the perfect time to lay a real financial foundation. Children, starting at age 8, become more aware of money and how much items cost.
- Explain the difference between “needing” something and “wanting” something
- Encourage them to set aside portions of their allowance by the 50-25-25 rule. 50% for immediate spending, 25% set aside for a “big” item and, 25% for long-term savings.
- Consider matching a portion of what they are saving, this could motivate your child to save
- Open a savings account for them
- Help them set financial goals of their own
- Help them shop for sales and a good deal, show them how price comparing works
- Introduce the concept of budgeting by explaining the family budget
These are the years where your child could face real consequences for not understanding money matters. This is also a great time to prepare them for quickly approaching college expenses.
- Encourage them to get a job and put that money towards some of their expenses
- Teach them about debit cards
- Show them how to wisely handle credit
- Introduce them to advanced financial matters such as diversified investments (there are even teen-oriented financial websites)
Not everyone is born with a head for numbers, it may take years of practice and constant conversations about smart money habits, but the payoff is worth the time invested. It’s never too early to start talking about the smart ways to handle financial matters.