Helping Children Learn the Basics of Finance
Practical, straightforward and age-appropriate tips to teach kids to save more than they spend.
Children are more observant than we may think, and that includes picking up parents' spending habits. Help children learn the basics of finance early with these practical, straightforward and age-appropriate tips from MetLife and Junior Achievement of Central Carolinas.
Focus on fun: With young children, focus on simple financial concepts, including needs versus wants, earning, spending and saving. Children in grades 3 to 5 can go more in-depth, focusing on the basics of entrepreneurship, making a product, as well as jobs and careers.
Set a goal: When a child wants to buy something, frame it as a goal. Help him understand how much money is needed and a set a timeframe for reaching his goal. A goal helps to keep a child motivated and interested in the banking process, and how saving is relevant.
Keep it interesting: Take your child with you to open his own bank account. Let him ask questions. Even if the questions seem silly to you, they help him build confidence about asking money questions.
Encourage and reward: When your child receives money for allowance or a special occasion, challenge him to deposit a percentage of that money directly into a bank account. Consider matching a percentage of the deposit as a reward for making smart saving decisions.
Monitor progress: When the monthly statement arrives, point out recent transactions, interest earned, and check the balance. Review the statement together to help him understand the progress he is making toward his savings goal.
Ins and outs: There is no doubt a child will want to make small purchases every now and then. Each time he withdraws money from his account, direct him to complete a withdrawal slip. Then review the updated statement to reflect the new balance. As a bonus, it’s extra math practice.