by Kinsey Love, marketing manager, Lewiston State Bank
Kids learn several important lessons at a young age: how to talk, how to eat, how to dress themselves. Many of these lessons are crucial to their well-being throughout life. But there’s one lesson that gets overlooked all too often: money.
Kids who learn about money from an early age, even as young as three or four years old, are more likely to feel confident about money and be more responsible as they grow. Teaching your kids about money doesn’t have to be hard or awkward; it can actually be very simple. Here are four easy suggestions that can give your kids a head start.
- Introduce a jar system. Let your kids pick out some sort of container to hold their money, such as an old pickle jar, piggy bank, envelope or box, and let them decorate the containers. Label three separate containers “giving,” “savings” and “spending.” Encourage your kids to use a simple model, such as 10-10-80: 10 percent of their earnings go toward a charity of their choice, 10 percent goes toward savings and 80 percent (or whatever is left over) goes toward spending. Then they can put those amounts into the respective containers. Where do kids get money? Giving them an allowance is a good way for them to start learning how to manage money. You could start with an allowance of 50 cents per week times the child’s age (8 years = $4/week). You can also pay your kids for doing extra chores around the house.
- Make a goal. Help your kids set goals on how they want to spend their money. They can draw pictures of long-term goals they want to save for and attach the drawings to their containers. If they are saving their money for a larger goal, you could do a matching program to help them learn the value of saving, sort of like a company might match an adult’s 401(k) contributions.
- Let them decide what to buy. Though it can be hard, letting kids make mistakes with money can help them understand how to make better choices in the future.
- Set an example. Let your kids watch you transfer money to your savings account each month. Talk to them about watching for sales, or only buying what is on your shopping list. Kids learn by example.
Teaching your kids how to save money can be a simple, fun lesson. The earlier you start, the less frustrating it will be for them in the future. Most of us treat money the way our parents did, so practice what you preach and show your kids how to budget and save money.