When your baby is no longer a baby
...and hits that magic age where they start asking for every stuffed animal or box of cookies or video game they can see, it can be hard to convince them that you’re not a millionaire, and money does have a limit. After all, they see you buy stuff all the time with that little plastic card! Fear not, parents: it’s easier than you might think to start your kid in the world of finance.
When talking to kids about money, the most important thing to remember is to be honest
Don’t hide your financial embarrassments - let your kids know you regret going into too much debt or not saving any money for retirement. Being transparent about these issues will allow for them to trust you, leading to a more open and healthy discussion. Then if your child has more questions or starts to get into trouble themselves, they’ll feel comfortable coming to you for help.
You can start building financial literacy for kids by answering any questions that come up naturally
“But why can’t I get the Star Wars lego set?” “We went to the movies yesterday, why can’t we go today too?” “You bought chocolate, why can’t I get some too?” Explain concepts like why savings are important, or what other things you budget for, or why you need to pay off loans first.
“I only get so much money a week, and that has to pay for our house. It also goes to the electricity, which is how you’re able to watch TV and play on the computer. We want to make sure we have money for those before we buy more toys.”
another way to teach your child financial responsibility is to sit down together and set goals as a family
Create a budget together and discuss each item and its importance. Show how much money is needed for each expense and give your kid examples of what things you sacrifice for these benefits. For example, maybe you can’t go to Disneyland because that money goes into your house payment which provides your family a safe place to live.
When it comes to finance for kids, remember: even though your child’s input is valuable and you want to work together, the parents get the final say. Depending on how old they are, you can use a clear piggy bank or jar to add money to so they can have a physical representation of how close your family is to the goal. This is especially good for treats like a new stuffed animal or going to an arcade.
It’s best to start teaching kids about money at a young age
Go slow and be open about what you’re spending on and why. Answer questions as they pop up, and you might find yourself learning more too! The world is their oyster, and you want to give them the best oyster-catching tools.
Set your child up for success with financial education for kids. Start with the basics of saving and budgeting, and build on these concepts as they get older. Your family can only benefit from these talks - and you might find yourselves having a blast as you reach more and more goals!
It’s time to pounce on those savings opportunities - give your kid a head-start with a Pounce Account from SunWest Credit Union. Pounce the Ocelot will help your kids save more with a rate of 3.00% on the first $1,000 deposited. He also plans contests and lessons to show your little one just how fun managing their finances can be!
February 20, 2021
Published by SunWest Credit Union
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