FINANCIAL WELLNESS

4 min read

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Apr 2022

7 Tips for Raising Financially Savvy Kids

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WHAT YOU'LL LEARN

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When to discuss finances with your kids

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Early spending and saving habits you can share

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The important lesson of delayed gratification

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WHAT YOU'LL LEARN

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When to discuss finances with your kids

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Early spending and saving habits you can share

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The important lesson of delayed gratification

Several studies have shown a child’s early years are the best time to provide them with lessons they can draw from, and fall back on, for the rest of their lives. Of course, you can’t make your child remember all the helpful lessons you taught them by the time they reach adulthood, but you can instill them with healthy spending and saving habits early on to prevent any economic disasters. Try out these seven tips for raising a financially savvy kid so they’ll have a better understanding of the value of a dollar from the get-go!

Start Early

While some may find it taboo to discuss finances with their child, it’s never too soon to start talking about the fundamentals of financial wellness, such as earning money, setting long- and short-term goals, saving, building credit, and sticking to a budget. The more your kids understand now, the more they’ll feel prepared when the time comes to make financial decisions for themselves.

Even at an early age, kids understand the concept of more versus less. And everything you share about financial awareness with your children through observation, lesson, and, most importantly, repetition, will help them grasp newer concepts and terms faster.

Don’t Be Afraid of Complex Topics

Kids are smart. Whether it’s with technology or pop culture, they’ve probably taught you a thing or two! So don’t shy away from financial topics you might initially think your child may not comprehend. It can’t hurt to try!

More than likely, your child will understand the choices they make will affect them in the future. With that being said, you can explain that turning the lights off when leaving a room will save money on the electric bill. Or you could take your lessons a step further by explaining how one day, they will have a credit score.

The more mature and healthier one’s credit history is when they go to make a monumental life move, like buying a car or a home, the better! Explaining that a credit score can be positively or negatively affected by their spending habits, as well as discussions on ways to build credit, can be extremely eye-opening and empowering for a young person. Additionally, they’ll understand just how meaningful, and potentially dangerous, a credit card can be when the day they apply finally rolls around.

Discuss Saving Goals

Working toward a goal of any kind is undoubtedly a great lesson for a child to experience early. Plus, adding a financial component requires an additional level of diligence and maturity that will also help your child grow.

After creating a saving goal, such as a new video game or concert tickets, your child will soon understand putting money aside as opposed to spending it all at once will allow them to make larger and more significant purchases over time. The value of stretching a dollar will return with a vengeance when they get older, so discussing saving goals now will be useful information they can keep in their back pocket.

Turn an Allowance Into Something Formative

While this is certainly not the case for every child, giving out a weekly allowance has the potential to teach that money should be expected, not earned. But because making mistakes with money now as opposed to when your child is grown up is the best option for their financial awareness, that doesn’t mean you should cut out their allowance completely.

Consider giving your child the money only after they complete a list of chores around the home every week. That way, they will see firsthand that work and effort correlate to money earned.

Show the Value of Hard Work

Don’t just explain to your child how important it is to be a hard worker, show them that extra effort, dedication, and the resolve to never quit can lead to positive outcomes. If your child is older, come up with a list of ways they could make money around the neighborhood, like washing cars in the summer, mowing or raking lawns, or walking your neighbors’ dogs. Your child will get an early taste of responsibility, but they’ll also see how rewarding it can be to go the extra mile.

And if your child is younger and perhaps not ready to take on such a large responsibility, you can still show them the value of hard work. If you’re currently giving your younger child money each week for the chores they do around the house, add a few extra entries to the list that may be a little more involved, like organizing their closet or completing their homework by a certain time, for a bonus on their allowance.

Involve Your Child in a Big Financial Decision

Walk your child through each step of a major family purchase to map out every decision and factor that goes into making a big-time financial decision. If you’ve been planning on purchasing a new car, remodeling your kitchen, or perhaps even considering buying a new home, let your child tag along so they can gain hands-on experience with life-changing purchases before it’s finally their turn to make a monumental purchase. Show them the importance of doing research and selecting a company you can trust.

Let Your Child Experience Delayed Gratification

Look, we’re all guilty of making an impulse purchase. Maybe it’s as big as the latest electronic on the market, or maybe it’s as small and insignificant as throwing a candy bar in the cart while you’re checking out at the grocery store. Either way, your child will greatly benefit from a sit-down meeting on the positives of postponing an immediate gain for a better reward down the line.

You could explain to your child the difference between “wants” and “needs,” as well as how to save for the wants while avoiding the unplanned splurges. Give examples of the ways to save each month that make it easier to meet all your financial goals.

Getting Started

With so many great resources available today, there are a variety of ways to apply these seven lessons to different life circumstances and goals that best fit your family! We look forward to continuing to partner with you and the communities we live and lend in – and beyond, to raise financially healthy and educated children for generations to come!