Teach the concept of money early to raise a financially savvy child.
It’s a shocking statistic. According to a survey conducted by the Jump$tart Coalition for Personal Financial Literacy, a Washington, D.C.-based advocacy group, 75 percent of America’s young adults don’t have the skills to make sound financial decisions.
- Flash your cash. In a world where anything can be purchased with the swipe of a card or typing of a password, the simple reality of cash can help teach the value of a dollar. Counting coins and bills can also help preschoolers with hand-eye coordination and math skills.
- Give an allowance. Kindergarten is a great age to start a weekly or monthly allowance. A good rule of thumb is to pay $1 for every year of their age, so the incentive grows as they do. Make sure the allowance is based on completed chores, though. That way, kids understand that money is earned.
- See the savings. Using a clear container as a bank can help give kids a sense of accomplishment watching the coins and dollars stack up. Make goals visible by marking a line on the side of the container as a target to reach.
- Divvy up the proceeds. To teach money management, as well as delayed gratification and charity, encourage your child to divide funds into three piles: savings, spending and sharing. You can do this online with the website Threejars.com, where kids can track their earned allowance and even earn interest on savings.
- Set goals. Help your child develop savings targets to make sure savings isn’t an open-ended concept. The first goals should be reachable, fun and defined by both the parent and child. Sure, it may seem silly to save for a small toy, but the sense of achievement is worth it.
- Take it to the bank. As your child matures and has accumulated at least $100 in long-term savings, look into a bank savings account. Most major banks offer children’s savings accounts that can be opened online or at a local branch. A trip to the bank may be a new and fascinating experience for your child, inspiring a sense of maturity and financial responsibility. It’s also a great time to talk about concepts like interest and risk.
- Talk it out. The best tool for money management is conversation. Parents should talk to their kids about money matters like budgeting and investing. Aim to mirror good money behaviors, but remember it’s also okay to admit to your own money mistakes.
Do As I Do. Show your kids what smart money management is. Visit Nationwide Bank for information on banking, investing and more
- Teach your kids financial responsibility (gbonjubolasanni.wordpress.com)
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- Money Milestones for Kids (pricej2.wordpress.com)
- Children should be taught how to manage money from an early age, research shows (walesonline.co.uk)
- Free App: Teach Kids Money Management on Green$treets (igamemom.com)