You could make a generalization that American adults aren’t very good with money. After all, we do owe about $1.1 trillion in student loan debt and about $845 billion in credit card debt. However, there is hope for the future, and starts with you teaching your kids great money habits throughout their lives.
Teaching kids about money can be tricky, so FNB Fox Valley is here to offer a tip for each age group of children, along with an activity that can help reinforce the lessons.
The lesson: You may have to wait to purchase something you want.
Activity: Give them three jars, with one labeled “Spending,” one labeled “Sharing,” and one labeled “Saving.” Whenever they receive money, disperse it equally among the jars. The spending jar should be used for small things like candy or trinkets, the sharing jar should be used to help someone in need and the savings jar should be used for more expensive items.
The lesson: Spending money wisely involves making smart choices
Activity: When at the grocery store, give your child $3 to spend on a small food item, having them ask the following questions before purchase: “Do we really need this? Could I buy a generic brand for less than this name brand?”
The lesson: The sooner you save, the faster your money grows
Activity: Explain the concept of compound interest to them, then have them go to Investor.gov to have them do simple calculations so they can really see what compound interest does.
The lesson: When looking at colleges, be sure to keep the “net total cost” in mind.
Activity: Talk to your child about how much you are willing to help them with their education costs, then use the FAFSA 4Caster tool at fafsa.ed.gov to see what kind of financial aid your child could receive.
The lesson: Only use a credit card if you can pay it off in full each month.
Activity: Look for credit cards with low interest rates and no annual fees together, and explain to them that if you co-sign on the card, missed payments will affect your credit score as well as their own credit score.
See if you can put these lessons and activities into effect this year. It’s never too early or too late to learn better money habits, so let’s work together to make our children better money managers for a more secure future.