Manage Money with Your Child
Children can be introduced to the concept of money at a very young age. Whether it’s spending birthday money on a new toy or accompanying a parent to the grocery store, there are many opportunities for children to develop the skills necessary to be financially successful.
Consider these topics when you talk about money with your child:
• Values – Think about your learning experiences and what lessons you might want to impart to your child. Consider how your family approaches finances and what you consider good and bad money management. What are your opinions on saving, spending, and debt? Being able to explain how you view money can help answer questions.
• Goals – Demonstrate how to set goals and explain why goals are important. Encourage your child to establish SMART goals – Specific, Measurable, Attainable, Realistic, and Timely. You’ll also want to discuss the difference between needs and wants and how they can affect short-term (three months), mid-term (three months to a year), and long-term (more than a year) goals.
• Planning – With a specific goal in mind, children are more receptive to developing a plan for ways to reach that goal. Create a budget and spending record to help your child visualize where his or her money is going. It’s through the consistent use of a budget that your child will learn the importance of planning, consequences, and modification.
• Earning Opportunities – Consider how your child accrues money. Will it just be from monetary gifts at birthdays or holidays, or will there be an opportunity to earn money for things like chores? Determine what role allowance will play in your child’s life. Learn about tips for developing strong savings skills.
• Power of Growth – Investing can be a pretty advanced topic, but the basic idea of growing money is an important one. Use simple visual aids, like the one to the right, to show how powerful investment growth can be. Be sure to reinforce the idea of interest, time, and frequency. Children learn best through observation, discussion, and assistance, so try to capitalize on teachable moments – anytime your child’s interest is focused, like at the ATM or when you swipe a credit or debit card. By responding to their curiosity, you can immediately have a discussion about financial responsibility. Learn more about how SLFCU can help start your child on the path to financial success.
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