Teaching Kids About Money
Adults spend time teaching children important life skills such as reading and arithmetic, but we often don’t make the effort to introduce ideas about financial responsibility. Teaching children a few key concepts related to savings and credit can have a positive impact throughout their life, producing adults who are better equipped to manage their money.
Saving skills at every age
There are appropriate concepts for dealing with money at each stage of development. Children as young as two or three can use a piggy bank (or glass jar) to help start the process of understanding savings. Four and five-year-olds love to play pretend grocery store and restaurant. Use a toy cash register or a toy credit card machine to ring up the bill. Imaginative play is a great way to teach about paying for goods and services. There are also some great age-appropriate resources from Sesame Street for teaching kids about money and making it fun for everyone. Older children love to play too, but they can also help clip coupons and assist in actual grocery shopping, learning how to make decisions based on price and value. They will often respond positively to having opinions that matter.
It’s never too soon to open a savings account for a child. Sunflower Bank offers the Essential Savings account without fees for children under 18, which is a great place to begin and make saving fun. Regardless of the account you choose, be sure to involve the child in making deposits, going to the ATM, or doing online banking. Children learn through observing and you may find your child has a natural aptitude for finance!
Learning about credit
Teaching pre-teens about credit—what it’s used for and how the choices they make can affect their credit score—is not as scary as it sounds. In fact, it’s easier to start good habits from day one rather than try to rebuild credit that’s been damaged. According to Experian, the average American carries four credit cards with a balance of almost $6200. Teaching teens that credit is actually debt and not potential income is a simple concept that can help them as they go through life.
Older teens and young adults can begin to build credit by becoming authorized users on a parent’s credit card. Parents can review monthly statements with the teen and teach them about making payments. Having a good credit history can help the young adult as they do everything from getting a cell phone to qualifying for apartment leases with lower security deposits.
No matter where you are in your journey to teach a child about money, the most important thing is to lead by example. You don’t have to do anything out of the ordinary—simply involve the child in discussions about things like needs vs. wants, or making choices when shopping, or going to the ATM and paying bills online.
We also host financial literacy events and field trips for students. Ask one of our bankers for more information the next time you stop by.