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Teaching Kids About Money

Teaching kids about money and finance is an important life skill that should start at an early age.  Here are a few age appropriate tips to help your child learn about money.

Kids K - 4th Grade

    • Parents can start teaching their children about money and the value of a dollar from as early as age 5. At this young age up until about 4th grade, parents can start by taking the time to explore the different denominations of money with their child. You can do this by helping them start a “Piggy Bank” and counting the money that’s in it each week or month.

    • Parents can also explore their child’s school curriculum by looking for any topics they plan on teaching in school that pertain to money or finance. Then, talk about it at home so you’re reiterating what they’re learning in school.

    Kids 5th - 8th Grade:

    • When kids get a little older around 5th through 8th grade, have them help you pay cashiers when you’re out shopping together. Explain the difference between using cash or your debit or credit card so they can see and understand how money transactions work in the real world. This scenario also provides a great opportunity to explain the difference between cash and credit.
    • This is also a prime time to start an allowance system in exchange for doing chores around the house or for getting good grades in school. Parents can help set goals and a budget to show kids how short or long it takes to earn money.

     

    Kids 9th - 12th Grade:

    • Generally, by the time your kids are teenagers in high school, they start making their own money at their first job. During this time, parents want to stress the importance of saving with goals in mind.
    • A good way to do this is to teach your kids to live on 50% of what they bring home (assuming at this age there are little to no bills to pay). A reward of a cell phone and the bill that comes with it can really make an impact and help them budget for expenses.
    • You can also help them open a savings account and introduce them to online and mobile banking so they can easily check balances. It’s important to take the time to review bank statements with your child and balance the books now that they’re making their own money.

    • Perhaps the most important tip for parents is to introduce the concepts of CREDIT and how it works. Consider matching their savings account by extending them a loan at the match amount.  Reward them if it’s managed properly by allowing them to keep the extra amount. If not, parents could impose fees or penalties to help them understand the importance or good credit and the consequences of poorly managed finances.

    • By the time your kids are in college, they’ll be prepared to manage money successfully on their own.

      These are just a few tips. As parents, there are so many ways to give our children a good start regarding finance and how money works in our economy. For more information on this topic, please visit the FDICs website.