5 Ways to Teach Children Financial Literacy
It’s never too early to teach children the value of a dollar. In fact, even the youngest of kids can sort change and begin to understand that coins and dollars have a value assigned to them. As they get older, their knowledge of finances and savings will organically mature, but there are things you as parents and caregivers to can do to ensure they are set up for financial success in the future.
Teach wants vs. needs: This is a skill even some adults struggle with. There is a difference between items, services and experiences we must have to survive and those we want because we believe they will enhance our lives. Children who learn this very young will grow up with a solid understanding and will hopefully make better financial decisions as adults.
Create ways to earn money: Before children can save, they need to earn some money. This can be achieved with simple chores around the house or as they get older, jobs like baby-sitting and mowing the lawn, and then as they get even older, they can get part-time jobs while in high school. The general rule of thumb for allowances is to pay $1 to $2 per week for each year of their age. For instance, a 10-year old would earn $10 to $20 per week; although, this can vary depending on the household budget.
Set savings goals: Kids at any age inevitably have on ongoing list of items they want. Have them make a list of all the toys and gadget they’ve been dreaming about, then prioritize them in order with the most desired item at the top. Next, have the child research the price of each item and then figure out how much they would need to save to purchase the item for themselves. Depending on their age, you’ll need to help them with this. Not only will this empower them, but it will also show them how challenging it is to earn enough money to buy something they want. This will hopefully bolster appreciation for their parents next time Mom or Dad buys something.
Provide a place or account to save: This can be something as rudimentary as a piggy bank, but in today’s world, there are better options. For instance, United Community Bank is now offering an account called United’s Treasure Chest Youth Savings Account. With just $5, parents can open an account for their children and manage it either in-person, online or through mobile banking. The difference between this account and similar offerings at other banks is that United Community’s option is specifically for young children, aged 12 and younger. Not only does this provide them a place to save their money, but it gives them practice going to a bank and experiencing the process of depositing money.
Show them how money grows over time: Whether it’s through the online dashboard, mobile app or in the physical bank building, create a routine of checking the child’s savings account to they can see how money grows over time. By making this a habit, children will grow into adults who feel in control of their finances.
These strategies will greatly improve your child’s knowledge of and relationship with money. If you have additional questions about United’s Treasure Chest Youth Savings Account or would like to go ahead and open one, visit your local United Community Bank or click HERE for more information.
