Sentry Credit Union
Updated 5:22 PM CDT, Fri September 27, 2024
Published Under: General
Teaching kids about money from an early age sets them up for the future in a way that gives them valuable upper hand. Financial literacy builds the foundation for a lifetime of sound financial decisions, allowing young people to cultivate a high level of independence and stability. When it comes to guiding your child through the different stages of learning about money, Sentry Credit Union is here to walk you through the process.
Why Financial Literacy Matters
Exposing your child to financial concepts early on is one of the best ways to get them comfortable and familiar with the topics. Financial literacy naturally builds responsible habits and sets them on the path toward achieving their future goals—whether that means saving up for college, a car, a home, or maybe even retirement. Once you’ve taught them how money works, you’ve essentially given them the tools to make informed decisions as they grow older.
Age-Appropriate Financial Lessons
Early Childhood (Ages 3-5):
At this age, it's all about understanding the basics—without much added fluff. Teach your child to recognize coins and bills and explain that money is used to buy things. Within this, you can also help them grasp the difference between what they want and what they actually need. Simple tasks like sorting coins by value or playing shop introduces these basic foundational concepts, as well.
Elementary School (Ages 6-12):
At this age, children are at the stage where they can slowly begin learning more complex ideas. Start small by explaining what saving means and how it works. This is also a great opportunity to discuss budgeting, especially if they earn an allowance. To re-enforce these lessons, consider opening a savings account to provide a hands-on way to teach the importance of saving money.
Teenagers (Ages 13-18):
As your child enters their teenage years, it’s important to get a bit deeper into the above topics as well as introduce new concepts. Now is the time to introduce checking accounts, credit and debit cards, and the basics of budgeting. You can also begin to discuss long-term savings, investments, equity, and interest rates.
Practical Tips for Teaching Kids About Money
Use Real-Life Scenarios:
Don’t be afraid to loop your kids into everyday financial decisions. When you’re out and about grocery shopping, show them how to compare prices and let them see how financial choices affect day-to-day life.
Set Up a Savings Plan:
Teach your child to save part of their allowance and use visuals, like a savings jar, so they can track their progress easily. This will help instill the value of delayed gratification and goal-setting.
Open an Account with Your Credit Union:
Opening a savings account for your child is an excellent way to teach them about money management. It’s a real-life application of what they’ve been learning and might motivate them to save even more. Check out SCU's Youth Savings Account for an easy way to get the ball rolling.
Teach Money Management:
Help your child create a simple budget to manage their allowance or earnings. Use apps or spreadsheets to make the process interactive and fun.
Discuss the Value of Hard Work:
Be sure to explain that money is earned through work, which in turn reaps rewards. Setting up an allowance tied to chores or other responsibilities helps kids understand the value of money and develop a strong work ethic.
Fun and Educational Activities
Money Games and Apps:
There are plenty of apps designed to teach kids about money in a fun and engaging way. Games effectively reinforce concepts like saving and budgeting. Apps like My First Nest Egg are great resources for kids to learn budgeting basics.
Fun with Financial Activities:
Head to SCU’s Youth Activity Center to download entertaining activities designed to help your child learn about money in a playful and educational way.
Role-Playing:
Set up a pretend store at home where your child can "buy" and "sell" items using play money. This hands-on activity helps them understand how transactions work—and allows you to get in some quality time at the same time.
The Impact of Parents and Guardians
Lead by Example:
Your child observes and learns from your daily actions. Showcase positive financial habits by practicing budgeting, saving, and discussing money openly. Your behavior sets a powerful example for them to follow.
Regular Discussions:
Make discussing money a regular part of your household conversations. Avoid treating it as a taboo subject, as that can hinder your child's financial confidence. To encourage questions about money, create an environment where your child feels comfortable asking questions about money so that they feel secure exploring and learning.
Long-Term Benefits of Financial Literacy
Financial Independence:
When you choose to teach your child about money now rather than later, you're setting them up for future financial independence and a comfortable means of living. Gaining a clear understanding of how to manage their money wisely will give them much-needed security in adulthood.
Avoiding Debt:
Financial literacy helps kids avoid issues down the line, like large amounts of debt. When you teach them about the importance of sticking to their budget and saving for large purchases rather than relying on credit, you can effectively keep them away from this common financial error.
Planning for the Future:
Help your child understand the importance of setting money aside and saving for long-term goals. While it might feel abstract to them now, encouraging them to think about the future will help them make responsible choices when it comes to their finances.
Final Thoughts
Teaching kids about money equips them with the tools they need for a secure financial future—something that’s become even more critical in today’s economic climate. Involving them in money management and offering guidance along the way allows you to empower them when it comes to making wise financial decisions. Sentry Credit Union is here to help, with easy-to-use resources and support for parents. To get started, chat with one of our expert advisors about opening a Youth Savings Account today.