If you’re ready to start thinking about your finances, we’ve got good news for you: April is Financial Literacy Month. Promoted by the Jump$tart Coalition, National Financial Literacy Month is a great time to evaluate your financial situation and make a plan to reach your financial goals.
It’s a great time to teach your kids about financial responsibility, too. In fact, April 22ndis Teach Children to Save Day. If there’s any time to have a conversation with your kids about finances, it’s now. Not sure where to start? We’ve got a few ideas on how you can start teaching your kids about financial responsibility right now.
1. Talk About Money
There’s only so much you can explain to your little ones about money, especially in a way that they’ll understand. But it doesn’t hurt to help them understand that things cost money. Creating that awareness in them at a young age will help them be a little conscientious in the future.
For example, let’s say that you’re at the store when your four-year-old spots a toy they like. Instead of simply saying no, explain why you won’t get it for them. It could be along the lines of, “That toy is $25, and we have to buy groceries instead because they’re a priority.”
Kids also learn by watching—take them shopping with you, show them how you look for the best deals, explain why you only want to spend a certain amount. All this could help your child become more aware of money and how they spend it in the future.
2. Give Them a Small Allowance to Manage
Sometimes the best way of teaching your kids to manage money is by giving it to them. But instead of just handing it out, make them work for it! Offer to pay them for doing extra things around the house beyond their usual chores. That way, they’ll appreciate and understand the value of a hard-earned dollar.
Once they’ve got money saved up, let spend their money how they want to. You can encourage them to manage their money responsibly—and lead through example—but you’ll have to let them make their own choices. It might be hard to sit back and watch because your kids will definitely make a mistake or two. But the best way for them to learn is to manage and spend their money themselves.
3. Teach Them the Importance of Saving
Kids probably won’t have any problems understanding how to spend money. But the concept of saving money might be a bit more difficult. Start out by giving your kids financial goals. Maybe there’s a bike they’d like to buy or a game console they have their eye on. Explain to your kids that if they put some of their money aside, they’ll be able to afford what they want eventually. And the more they save, the sooner they can buy it.
Help your kids understand saving by letting them visualize it. There’s a reason why a savings jar is so effective! When your kids actually see their savings pile up and get bigger, they might be more motivated to save up.
4. When They’re Old Enough, Encourage Them to Get a Job
When they reach a certain again, paying your kids a dollar or two for doing extra chores around the house probably won’t cut it. You might want to encourage them to get a job. It’s up to you and your child to decide if they’re old enough for a job, so make sure to have a serious discussion about it.
If your kid is up for the task, an after-school job is a great way for your kids to learn how to work for their money. Whether it’s working as a waiter, cashier, or simply picking up more babysitting jobs, working will teach your kids financial responsibility and a good work ethic.
5. Help Them Create an Easy Budget
Hopefully by now, your child grasps the basics of saving up for things that they want. But it’s just as important for them to understand that they’ll need to put money aside for some not-so-fun things, like rent or other bills. That’s where teaching them how to budget will help.
You can start them off with something easy, like the 50/30/20 rule. Essentially, they’ll divide their paycheck into three sections: 50% for their needs and essentials, 20% for their savings and 30% for whatever else. It’s a pretty easy budget to stick to without them having to get granular.
6. Explain the Importance of Credit
If you really want to set your child up for a successful financial future, explain to them why credit is so important. Explain to them how credit work sand how it impacts their ability to get a loan, credit card and even rent an apartment.
To get them started on their credit journey, and if your child is old enough, encourage them to sign up for our credit report card. Your child can monitor their credit score, see how they can improve and become more aware of their credit score in general.
It’s Never too Early to Teach Your Kids About Finances
Want to set up your children for a successful future? Teach them about finances! Financial responsibility is a skill that can take years to learn, so don’t be afraid to start early. And if you want to get a handle on your own finances and credit for Financial History Month, consider signing up for Extra Credit. You can work to get your credit where you want it to be, which could help you reach your own financial goals.
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