A Parent’s Guide to Teaching Kids About Finances

When is the best time to start talking to your kids about money? As soon as possible. The sooner you instill healthy financial habits, the better. According to a 2017 T. Rowe Price survey, 69% of parents have some form of reluctance when it comes to talking about money with their kids. The survey also says that parents who discuss financial topics with their kids on a weekly basis are more likely to have kids who say they are smart about money. It’s never too late to start having conversations around money with your kids or to dive a little deeper into personal finances. Here are some age-appropriate ways you can help your children plan for their financial future.

Preschoolers and kindergartners

1. Use a clear jar for savings – Using a clear jar to collect savings helps kids visualize their money, rather than a concealed piggy bank. It teaches the lesson that when you save money, it actually grows.
   
   
2. Let them participate – Teach them the reality that items cost money by letting them physically hand cash to a cashier at a restaurant or store. They need more than just being told about how money works, they need ways to put concepts into action.
   
   
3. Lead by example – Just like any other value parents want to instill in their kids, actions teach more effectively than words. Children begin learning about saving and spending between ages 3-5. Set a healthy example around money – your kids are likely to carry this view around finances into adulthood.

Elementary and middle schoolers

1. Give commissions – Instead of a weekly allowance, pay kids for completing household chores. A guaranteed allowance doesn’t teach kids the concept of earning money. Taking out the trash, mowing the lawn, and cleaning their room are ways to show that money isn’t given but earned.
   
   
2. Teach money values – You don’t need to disclose your salary or bank statements to your kids to teach them the basics of saving, budgeting, spending and giving. Consistently instilling values and teaching them the power of delayed gratification, following a simple budget, spending money wisely, and practicing generosity will stick with them throughout their lives.
   
   
3. Practice contentment – Elementary and middle school is the age where kids may start to be influenced by advertisements and social media or start comparing their clothes or possessions to their classmates’. Avoid impulsive purchases and consider a low- or no-spend summer to encourage them to appreciate what they already have.

Teenagers

1. Set up a simple bank account – By the time kids are teenagers, it’s time to set them up with a simple bank account. Giving them this responsibility, no matter how little income they have, prepares them for the future when they have additional responsibilities and money. Consider the Everday Youth Checking Account from Luana Savings Bank.
   
   
2. Introduce them to investing – We all wish we knew about compound growth earlier on, which is exactly why introducing investing to your teens at an early age is incredibly impactful. There are investment accounts specifically for teenagers and getting them started early will have them ahead of the game by the time they enter the professional world.
   
   
3. Help them figure out ways to make money – Help your teen find jobs they can work over summer, spring and fall breaks. Better yet, if they have a hobby or skill they can turn into a side hustle, help them turn their passion into a profit and encourage entrepreneurship.

If you're interested in opening an account for your child's financial journey, consider Luana Savings Bank's Everyday Youth Checking or a Kid's CD.