How to Help Your Kids Develop Good Financial Habits Early
Tuesday, August 13, 2019
One of the top goals of parenting is to teach your children how to be successful, happy adults. Since making smart financial choices is so critical to a successful adulthood, it’s important to start teaching your child about healthy spending and saving habits early. Here are a few ways you might break down the big concept of “financial responsibility” into easier steps for your kids.
Let your kids join the conversation
Though we might feel like our kids shouldn’t have to worry about household finances, letting them share in some of our everyday choices can be very impactful.
Start by sharing the basics of your household budget. You can explain the idea of paying for the “needs” before the “wants” without getting into actual numbers. Let your child know early on there are limits to “fun” money — for example, sometimes you might need to skip going to the movies now so you can save for a trip later. When you go by the bank or pay bills online, take a short moment to explain these routines. Most importantly, allow your kids to ask questions!
Try an allowance
Giving your child a weekly or monthly allowance can help them understand the spending power of their money. Some families choose to tie chores or other activities to an allowance. For instance, doing the dishes might earn $2 or taking out the garbage might earn $1 — a child could choose to do both chores, one and not the other, or none at all. This allows kids the opportunity to experience choosing how much effort to give for different amounts of money. Another example is creating a list of non-negotiable chores that need to be completed each week to earn a lump sum. This more closely simulates earning a traditional paycheck.
Some families might choose to give an allowance without requiring chores, and instead base it on school performance, citizenship or any other criteria. Choose which option fits your family best or even try several!
Let them make purchase decisions
If your child gets an allowance, it’s a great idea to let them pick out what they spend it on. Let your child go to the store and see the price of something they’d like to buy. Then have them count what money they already have. From there, help them understand their options — do they have enough money or do they need to keep saving? Will they have any money left over? Is this item worth what they’re giving up? Help them learn to contextualize their purchases — is this candy worth three nights of taking out the trash? And so on. Helping your children think through these everyday give-and-take decisions will truly benefit them in the long run!
Open a Montgomery Bank Kid’s Club Account
You can also teach your kids the importance of saving by opening a Kid’s Club account for them. The Montgomery Bank Kid’s Club is a special savings account for children 12 and under. Kid’s Club members receive a stuffed Monty dog when their balance reaches $100, a 5.01% annual interest rate on their first $500, plus postcards from Monty and more.
Learn more about our Kid’s Club accounts and get started setting one up today!