Being smart with money doesn’t always come easily; for parents, it’s important to instill a money-saving mentality at an early age for your children. The professionals at Broussard Poché, LLP, have a few tips that could make the journey a bit easier.
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 piggy bank and let them place gift money in the bank
- when they ask for a toy or treat, say things like, “Well we 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 things, 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 conversations about smart money habits, but the payoff is worth the time invested.