Every parent wants their children to have financially successful futures. But not every parent knows how to talk to their kids about money. According to Money Confidence, 69% of parents surveyed have some reluctance talking to their children about money matters. But the sooner you teach your children about topics such as saving, spending and budgeting, the better. Here are a few tips to help you pass good financial habits to the next generation and raise money-savvy kids.
Be a financial role model
Kids often learn by watching and imitating their parents' behavior. Are you setting a good example with your financial habits? Every time you swipe your credit card, choose to make home-cooked meals instead of going out to eat or use coupons at the grocery store, you have an opportunity to teach your children about the value of money and the concepts of saving and spending.
Make saving fun
Encouraging your children to save their money isn't always easy. The key is to make saving engaging and interactive. For example, work with your kids to set a savings goal for a larger purchase. Help them determine how long it will take to reach their goals and track their progress together by using a chart on the wall to help them visualize their savings. Setting and reaching a savings goal is a rewarding, memorable process. Your children will learn more about the value of money from gaining first-hand experience and have some fun at the same time!
Open a savings account for your children
Opening a savings account for your children is a great way to teach them about basic money management skills. Help your children make the most of every penny saved by opening a beginner savings account. Most credit unions and banks offer savings accounts that are designed specifically for children. These accounts are often jointly owned, meaning that parents can manage the cash in the account until their child turns 18. Once you open a savings account for your children, bring them with you to the bank or credit union to deposit cash and checks and show them how to monitor their accounts each month. Over time, they will see how the power of compound interest helps their savings grow.
Teach the basics of budgeting
Learning how to make a budget is an essential skill that your children will use for the rest of their lives. Help your kids keep track of their spending and savings using tools like a notebook, spreadsheet, worksheet or even a budgeting app. This way, they will see just how far their money is going and practice finding a balance between spending and saving for long-term goals. Ultimately, teaching your children the importance of budgeting will help ensure they know how to plan, prioritize and make smarter financial decisions down the road.
Set goals as a family
As your children grow older, consider including them in discussions about your family's long-term savings plans. Whether you're planning to save for a major vacation, a new car or college education, making saving a family affair will help your children feel more involved and invested in achieving the final goal.
Prepare teens for credit cards
By the time most teenagers prepare to head off to college, they will start receiving credit card offers by mail and email. A credit card can be a smart way for teens to start building credit, but it can also harm their credit score if they don't understand how interest works. Before your teen applies for his first credit card, be sure he has a plan to use the card responsibly and make payments to avoid accumulating excess debt. With sensible credit card use, your teen will have a solid credit score by the time he needs to apply for an apartment or a car loan.
Helping your children gain financial literacy is one of the best things you can do as a parent. By taking the time to teach your children smart money habits while they're young, you will help them achieve greater financial flexibility and freedom in adulthood.
For more savings tips and tools from Wright-Patt Credit Union, stop by one of our convenient local Member Centers or check out our helpful online resources.