Financial Literacy for Kids - Where to Start

It’s that time of year – students have returned to their classrooms and new school year routines. Family schedules fill up with homework, after school activities, and youth sports. However, even the busiest parents should take time to teach their children the basics of money management—something that’s not often taught in the classroom.

MONEY BASICS
Children may not understand the value of the dollar, but they observe how the adults around them interact with money. They notice you swipe a credit card at the grocery store. They see you standing at the ATM machine before going to the zoo. They may overhear stressful financial conversations. They may even be told by a parent that they can’t have something because it’s too expensive. According to an article by Forbes Magazine:

• Children as young as preschool age can grasp basic money concepts.
• A child’s money habits are formed by age seven.
• Parents are the number one influence on children’s financial behaviors.

SIMPLE CONCEPTS
Start the conversation with simple concepts:

• Saving - Don’t give allowances. Instead, give them “commissions” for chores and tip them for excellent jobs. Then, set up a system for them to save that well-earned money for things they want. This will help them learn the value of savings.

• Spending – Don’t give in to impulse buying. Let them weigh options and decide what to purchase.

• Giving - Teach them about giving: to a church, charity, or individuals.

Parents can demonstrate wise money habits and teach children to save in many ways. Let them make mistakes and learn healthy habits while the stakes are low, starting at preschool age.

Preschool
Ages 3-5:
At this age, your child is learning composure and self-awareness. Delay gratification to teach your child patience. Encourage your child to wait to buy something they want. Teach them counting and basic addition.se Monopoly, Payday, Life, a toy cash register, or coin and bill counting to make learning tangible and fun.

Teaching moment: If your child asks for a cookie, tell them they can have one right now, or two if they wait 10 minutes.

Elementary School
Ages 6-10:
Kids at this age are often asked what they want to be when they grow up. Talk to them about careers and work. Show them what household items cost and have them watch you pay bills. You can encourage your child to think through buying decisions by involving them in some of your financial transactions.

Teaching moment: Verbalize your thought process as you shop for groceries. Talk through what you need, and what you could do without for the week.

Middle School
Ages 11-13:
The sooner your child saves, the faster their money can grow from compound interest. Talk to your child about long-term goals. At school and extracurricular activities, your child is exposed to more and more media that encourages them to buy the latest fashions or newest toys. Go through a magazine with your child and explain how advertising works on their emotions. Demonstrate how they can make wise purchases with their money.

Teaching moment: When shopping at the mall with your child, identify what you are willing to spend more on. Talk about name brand clothing and weigh the options for items that may last longer, or a cheaper alternative that may need replacing sooner.

High School
Ages 14-18:
At this age, your child may be making plans beyond high school. Talk about college as a worthwhile—though expensive—investment. When your child is old enough to open a checking account, let them pay for activity fees with checks, so they can practice financial independence. Teach your teenager the danger of credit cards before they are tempted to apply for one.

Teaching moment: help your child compare tuition rates for each college they are considering.

Ages 18+:
As your child branches off from home, encourage contentment. Slowly give your child financial independence by having them pay their cell phone bills, rent, insurance, etc. You can support and encourage them as they take on more responsibility.

Teaching moment: sit down together to go over student loans (if applicable), help them set up a budget to manage their expenses, and make a long-term plan for saving money.

The Bank of Elk River is here to help you navigate your child’s financial learning. We provide youth resources for your child to learn about checks, savings accounts, and ATM machines. We can also help you set up a savings or checking account for your child, or help you set up their first debit card. For more tips and information, contact us today!