Money Basics for Your Kids

Start when they’re young.

Children know at an early age that mom and dad work, that an ATM delivers cash, and the swipe of a card pays for their toys and groceries.  Connect the dots for them.

Give them (or help them earn) an allowance.

Let them know that some money should be saved and some can be spent on the “nice to haves”.  (see Money Basics worksheet).  If your children are older, you may even require that they pay for some of their “need to haves”.  Remember that the allowance is a teaching tool so they learn early the lessons of earning, saving and spending.

Reinforce saving for the long term.

Require that at least half of all birthday, holiday and other special occasion money be put into a savings account for their future.  For the very young, a piggy bank may be the best choice.  You may wish to take your older children to the bank to open a savings account.  They’ll learn the advantages of putting money beyond the reach of their impulse buying.

Take them shopping with you to learn sound spending habits.

One of our Town and Country Bank team member’s mother always used a shopping list, checked prices and used the envelope system to keep track of her spending.  While they themselves don’t practice those methods, they have been a life-long saver because she understood at an early age that money was precious (and often scarce).

Consider too taking older children with you when you buy bigger ticket items – like a car or a refrigerator.  Negotiating price, reviewing contracts and debating the pros and cons of 12 months interest free or a 10% cash discount are invaluable lessons for them to learn.

Open a joint checking account.

Open an account with your child when they get their first job or go away to school.  Keep it simple but do sign up for online banking so you and they can easily monitor account activity and maintain positive balances.  You may wish to sign up for account alerts that tell you if a minimum account balance is hit or a large purchase is made.  Make sure that they know how to balance their account and how cash flows in and out of the account.

Consider helping your college-age child acquire their first low-balance or secured credit card (a cash balance equal to the credit limit is held by the issuing bank or credit card company).

This is a pretty scary step and not necessarily for everyone.  Still, chances are your child will have an opportunity to apply for a credit card sometime in their life and you may prefer to help them understand the risks and rewards.  If you choose to take this step, establish rigid rules for the use of the card and help monitor the card’s uses.  Help your child learn the value of paying on time and in full.

Teach your children about investing.

Only after lessons have been learned on earning, spending and saving, you may wish to teach your children about investing.