How Much Do Your Children Know About Money?
Observing their habits—and yours—can help you teach them about finances
Teaching kids about money—from saving to spending—can start at a very young age. Even small lessons during trips to the grocery store can help show them how to manage money responsibly. Whether you’re just starting to have financial conversations with your children or you’re wondering if you’re doing a good job expanding their knowledge, here are some tips from money coach Jean Chatzky. Chatzky recommends asking yourself the following questions to see how your kids may be learning about money:
- If your child forgets his or her sneakers at school on Friday, do you rush out to buy a new pair so he or she will have them for the weekend?
- Your son or daughter wants an iPod. What strategies would you use to help him or her earn the money to buy it?
- What does your child do with his or her allowance or the money he or she earns from odd jobs such as babysitting? Is he or she spending it all at once impulsively or saving for a bigger, more important purchase?
- If your son or daughter throws a tantrum at the toy store, do you give in and buy the toy?
- Do you and your spouse or partner fight about money matters?
Moneyland.time.com suggests the following “money milestones” that parents can use to see if their child is on schedule for understanding finances:
- Ages 3-5. A child should understand that you need money to buy things and that money is earned by working. He or she also should know that there’s a difference between needs and wants.
- Ages 6-10. A child should comprehend that you must make choices about how to spend your money and that you should shop around for the best deal. The benefits of putting your money in a bank account should also be learned at this age.
- Ages 11-13. A preteen or young teenager should understand that it’s smart to save 10 percent of what you earn, and that if credit card bills are not paid in full each month you end up owing more because of interest. He or she should also know the dangers of entering credit card and Social Security numbers online.
- Ages 14-17. As a teenager, your son or daughter should be aware of college costs as well as different school and loan options. He or she should also start to learn more about taxes, including that you pay taxes on your income and should budget for take-home pay, not gross pay.
- Ages 18 and up. A young adult should understand that you should use a credit card only if you can pay off the balance every month, and that you should always diversify your investments and pay close attention to the costs that accompany various investment products.
No matter how far along you are when it comes to teaching your kids about money, there are plenty of new, fun ways to teach them about financial responsibility. If you’re looking for help in this department, give us a call or stop by your nearest branch today.