In Partnership with GreenPath Financial Wellness
If you’ve ever been around children, you know that they’ll pick up on everything, including your financial habits, which is why it’s critical to set the right example for the kids in your life. Modeling healthy money management behaviors helps shape children’s attitudes and behaviors around finances, giving them a stable foundation for when they’re able to earn and manage their own money.
Consider these everyday lessons as opportunities to intentionally model strong money management skills:
- Show how money is used in everyday life: When shopping or going out to eat, you can talk about the different forms of money with children as young as 4, demonstrating the use of coins, cash, and credit or debit cards. Teach children the value of money and help them understand that things like toys, groceries, trips, and restaurant visits all come with a cost. At the same time, be sure to point out that free things, like helping a neighbor or playing in the park, also have value.
- Build a budget together: By age 8, many kids have some money saved up from birthdays and tooth fairy visits, making it the perfect time to build a simple budget. Use this budget to help them work toward a bigger spending goal and set a spending plan for the upcoming week. For older kids, you can discuss what they can do to earn an allowance and how that impacts their budget. For teens 18 or older, consider opening a personal checking account with a monthly limit where they can access money you deposit (or money they earn). They can withdraw money up to the monthly limit, helping them understand that once the money’s gone, it’s gone.
- Point out how adults earn money: Discuss how working is the way adults earn money, pointing out your profession and those of your family and friends. Help younger children understand that the people they see frequently – teachers, bus drivers, mail carriers, etc. – receive income in exchange for their hard work. With older kids, use this as an opportunity to brainstorm how they can earn their own money, whether it’s through dog walking, babysitting, or other tasks.
- Plan purchases in advance: Learn how to avoid modeling impulsive spending decisions by creating shopping lists before going to the store. Your child can chip in to help you list out everything you need and then, if they later ask for something else, remind them that it’s not on the list. For teens, shopping is more enticing, so try to teach them the importance of waiting before buying a “want”. If something’s on their wish list, work with them to understand how much it costs and how to plan for the money required to purchase it.
- Shop wisely: Finding the best deals can be fun and rewarding, so be sure to bring your child along when you’re grocery shopping or making a larger purchase. Younger children can help spot sale prices for you, and you can even teach them the price differences between different brands. Set aside enough time so kids can help you scout out the best prices when buying clothes or preparing for a party. With older kids, show them how you make informed shopping decisions by comparing prices and reading reviews online.
- Model healthy credit usage: Kids may think credit cards are pieces of plastic with infinite money, so it’s important to teach them early on what it means to buy things with credit. If you use your credit card for groceries, let them watch you swipe your card and remind them that you’re borrowing money and you’ll have to pay back the purchase (possibly plus interest). Many credit cards offer rewards on grocery purchases, so this is also a good time to talk about the benefits of cashback. When your credit card bill arrives, review it with the kids and emphasize the importance of making on-time payments, keeping balances low, and, ideally, paying your balance in full every month. For older kids, introduce credit scores and credit reports, using your own history as an example. If your credit history is stellar, consider adding your teen as an authorized user to set them up for success as an adult.
- Stress how important it is to save: Above all, children should understand that saving money is the key to a successful future. Teach them that instead of immediately spending their birthday money, they can save it for something more important or an emergency. Tell them about your personal savings account and savings goals, and introduce the idea of a high-yield savings account. For teens with earned income, make sure they’re saving and not making unnecessary purchases. You can visit a local bank, like Spring bank, personal savings options, including Youth Savings account for kids under 18.
Set Children Up for a Healthy Financial Future
No matter your financial situation, teaching these money lessons as early as possible is key to priming children for a healthy financial future.
As a community bank in New York, we’re happy to discuss basic financial terminology terms with your child and teach them what our personal checking and personal savings accounts look like. If you’re interested in transparent and affordable financial products, stop by our Bronx or Red Hook branch and bring your child along so they can witness banking in action!
All customers have access to the following:
- Spring Bank Mobile App for instant access to your personal savings and checking accounts online
- Free financial counseling with our partners at Ariva & GreenPath Financial Wellness
- One-to-one customer service. If you need help creating your financial goals or getting clearer on how to achieve them, our team is here to help you. Visit us in person, or give us a call at 718.879.5000