Teaching Children about Money
All across the nation, April is Financial Literacy Month. So what better time to start teaching your kids about being financially responsible? Chances are, they have probably learned quite a bit already from observing how finances are handled in your home. Marilyn Albertson and Karissa Berndt, USU Extension in Salt Lake County, recommend that having open discussions about money with your kids will empower them to make wise decisions when it comes to their finances. This does not mean that a parent should ever lecture their child about money. On the contrary, if you respectfully treat your child as a mature young adult, they are bound to reciprocate that respect and surprise you with their wise decisions.
As you give your children a little bit of responsibility with money when they are young, by the time they are teenagers they will really begin to understand the value of money. If they have some financial responsibility of their own, they will be able to discern between wants and needs, and they will even be able to curb unnecessary spending. Along with responsibility will inevitably come some mistakes-that's okay! Letting your teenager make some small mistakes with his/her money will only help them learn greater lessons from their decisions.
Planning a budget with your teen will help them learn good life-long habits. Teach your child how to plan a monthly budget around his/ her income and expenses. Making this into a habit will give your teen an awareness of how they are using their money, and it will give them the sense of control that a budget is meant to do. It is also a good idea for parents to include their children when planning their own monthly budgets.
Encouraging consistent savings is another key to teaching teens to be financially responsible. Open a savings account with him/her, and set guidelines about your expectations about savings. Along with savings, experts also recommend that people contribute a certain amount of their income to a church or charity. Many parents choose to enforce rules about a certain percentage of a child's income going toward savings as well as a charitable contribution.
Finally, wisely using an allowance or allowing your teen to work a part-time job is a great way for teens to learn the reality of income and expenses. Encourage your child to work for his/her money, as long as is doesn't interfere with their education. Having a real part-time job with a regular pay check will also give you a great opportunity to teach your teen about banking.
Remember to avoid drawn out lectures. Your teen is much more likely to positively respond if they do not feel as though you are imposing something on them. Approach the subject in a friendly and understanding way. Teenagers need to know that money is obviously important, but is not something to be obsessed with. As a parent, it is your responsibility to encourage your children to work hard, be responsible, save a portion of their earnings, and enjoy the money that they have.
· Encourage consistent savings
· Plan a budget
· Avoid drawn out lectures
· Encourage work for money
One great site that was developed by USU Extension, the Utah State Office of Education, Utah Education Network and the Utah Jump$tart Coalition for Financial Literacy is ‘Finance in
the Classroom’ (financeintheclassroom.org.) It is a website dedicated to helping parents, teachers and kids learn more about finance for children K-12 grade. It has great calculators for you to use, a list of great books by grade level and parent guides, home and community activities under the passport section and more. It also provides links to other great websites with information and activities that are appropriate for different ages. Some of those websites include videos you can watch as a family. It focuses on helping children and teens fulfill the financial literacy passport requirements set out by the Utah Legislature.
It may surprise you how quickly you can accumulate a million dollars. Use the calculator on the Finance in the Classroom website to determine the annual amount you would have to set aside each year to reach a million dollars.
For more information on finance, visit extension.usu.edu/juab, come to USU Extension at 160 North Main Street, Nephi, or call 623-3450.