As adults, we know a lot about money and how it works. But do you remember when you first learned about money? Do you remember the first money you ever held, spent or saved? Perhaps you received a check or cash from a relative as a gift. Did you put it in your piggy bank, or did your parents help you deposit it into a savings account?
Most people gain a basic understanding of money when they are young, usually from a parent or maybe a teacher. And now, it might be time for you to bestow some money wisdom on your child or student. But when should you start talking to kids about money? And how do you begin what is likely to be an ongoing conversation on finances throughout their lives?
Start the money conversation early and provide experience with it
- Understand that a conversation about money with your children is necessary. Money—how it’s earned, spent, saved and invested—is an almost universal aspect of everyone’s life. Just as children are taught to read and write and learn what their parents consider to be acceptable and not appropriate behavior, they must understand some of the principles of how money operates and affects everyone’s life, including theirs.
- Start the conversation early; even pre-school children can begin hearing about money and how it’s used. Children can begin learning about money before they start elementary school so parents or caregivers can continue to build on the child’s knowledge and experience as they age.
- Begin gradually introducing the concept of money and how it’s earned and used. If you’re employed in a paid position, talk about the work you do, how you are paid and what you do with the money, such as buying food and paying utility bills. Children should also learn that money has finite limits—there is only so much of it, and that means practical decisions are needed to determine what is essential and what cannot be afforded either presently (or at all) where spending is concerned.
- Let your children participate in small financial decisions that will directly affect them, in a situation that they can experience. Allow a young child to offer opinions on products that affect them and have a cost, such as a choice on new clothes, having a dessert at a restaurant or selecting a cereal at grocery store. Asking a child for an opinion is not guaranteeing that they are going to get what they want, but it gives them the opportunity to express a preference and learn about the financial realities of choices. Discuss with them the cost of the item and how it’s being paid for.
- Reinforce the benefit of saving by giving the child an opportunity to make and save money. If family finances allow it, a child could earn money per an individual activity, such as picking up their bedroom clothes daily or weekly, or keeping the bathroom tidy. An alternative to activity-based funding is to receive an ongoing allowance that may also be to linked to accomplishing something, such as regularly doing household chores or demonstrating good behavior at home and pre-school or school. The money may also come with a requirement that some portion of it must be saved, such as 10 percent going into a home piggy bank or savings account at a bank, credit union or other financial institution.
- Did you know that Delta Community offers personal Youth Savings Accounts for children age 12 and under that help educate children about money? There are Sandy Savers™ Accounts for kids ages 0-6 and Cool Cash Kids Accounts for ages 7-12. Children with these accounts can have fun saving and learning about finances at Delta Community Credit Union. They’ll get periodic communications from the Credit Union to learn about money and will receive a special welcome package when their account is opened.
Interested in more advice on managing money with the family?
More information on managing finances is available from free, monthly Delta Community Financial Education Center webinars on many different money-related topics. Please visit the Financial Education Center's Events & Seminars page to register for its no-cost, on-demand webinars.
Delta Community’s blog has other practical advice on children and finances:
Our financial counseling service BALANCE™ offers regular webinars to help guide parents on effective ways to educate children about financial responsibility that can last a lifetime, so...
Would you like more BALANCE™ in your finances?
BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.
Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.
Want to connect with a Financial Coach about your specific situation? Chat online, e-mail, or call 1-888-456-2227 to speak with a Financial Coach today.
Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.
