Raising Financially Savvy Kids: A Guide for Parents

Raising Financially Savvy Kids: A Guide for Parents

In today’s complicated economic landscape, equipping your children with strong financial knowledge and skills is more crucial than ever. It’s not just about saving for college; it’s about building a foundation for financial well-being into the future. Here’s a practical guide for parents on how to raise financially responsible kids:

Start Early, Keep it Simple:

Toddlers (2-5 years): Introduce basic concepts like “money buys things” and differentiate between coins and bills. Use real money during playtime to familiarize them with it.
Early Elementary (6-10 years): Explain the concept of earning money through an allowance or doing small chores. Introduce the idea of saving for a desired toy or treat.
Preteens (11-13 years): Discuss budgeting, comparing prices, and the importance of delayed gratification. Open a savings account together and explain how interest works. Emphasize how SMALL savings can turn into BIG savings over time.
Teenagers (14-18 years): Introduce more complex topics like credit cards, loans, and investing. Encourage them to get a part-time job and manage their own spending.

Model Responsible Behavior:

Children learn by observing. Be mindful of your own spending habits.
Involve them in family budgeting discussions, explaining how you prioritize expenses.
Demonstrate responsible credit card usage and discuss the dangers of debt.
Show them the value of comparison shopping and seeking out deals.

The Power of an Allowance:

An allowance can be a powerful tool for teaching money management.
Consider tying it to chores to reinforce the connection between work and earning.
Encourage them to divide their allowance into spending, saving, and giving categories.
Avoid bailing them out when they overspend; let them learn from their mistakes.

Saving and Spending Smart:

Emphasize the importance of saving for future goals, whether it’s a new bike or college.
Teach them to distinguish between “wants” and “needs.”
Encourage them to research purchases and compare prices before buying.
Explain the concept of compound interest and how it can help their savings grow.

Open and Honest Conversations:

Create a safe space for your children to ask questions about money.
Talk about your own financial experiences, both successes and failures.
It is okay to say you don’t know an answer, and then research the answer together.
Tailor your discussions to their age and understanding.
Discuss the importance of charitable giving and helping others.

Practical Tools and Resources:

Find age-appropriate books and online resources to supplement your teachings.
Consider opening a joint savings or checking account with your teenager.
Explore budgeting apps and tools that can help them track their spending.
Many banks and credit unions offer educational programs for children and teens.

Values and Money:

Money is a tool, and it is important to discuss how that tool can be used.
Discuss how your family values align with how you spend and save your money.
Discuss how to avoid materialistic values.
Talk about not comparing to others materially especially in the neighborhood and through social media.
Discuss the importance of giving back to the community.

By consistently reinforcing these principles, you can help your children develop the financial skills and habits they need to achieve a secure and prosperous future.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan:

GET STARTED HERE

Would you like to meet one-on-one with one of our Financial Counselors to talk specifically about your budget? Check out our Financial Coaching Session https://parachutecreditcounseling.org/services/credit-budget-counseling/#financial-coaching or call 716-712-2060.

Raising Financially Savvy Kids: A Guide for Parents

Published by Libby Morsheimer