Teaching your child good money habits
It's not too early to learn how to spend and save
Learning to manage money isn’t just for adults. Although many kids don’t have financial obligations, the habits and lessons that they absorb at an early age can shape their financial future. If you’re looking for the right way to start teaching financial health, First Tech is here to help. It’s never too early to learn good spending and saving tips.
Let them make their own money
To get your kid invested in smart money management, it’s important to let them earn their own money. Establishing an income can help give your child a sense of ownership. Whether it’s a regular allowance or money for finishing chores, providing them with their own funds can help get your child enthusiastic about how to save or spend.
Wants vs. needs
After they begin earning regular income, talk to them about the difference between wants and needs. Without bills, insurance or a mortgage to pay for, it can be hard for kids to appreciate the distinction. But the concept of opportunity cost—or the value of something that must be given up to achieve something else—is good one to learn early. Explaining that “if you buy X now, you won’t have money to buy Y,” can help get your child thinking about the importance of savings and prioritizing their wants and needs.
Keep a spending journal
Next, have them track all of their spending for at least a month or so. Keeping a list of all their purchases is a good way to help them begin to see patterns in their spending. Identifying patterns is an important step towards learning how and when to save, and how to limit frivolous expenses.
Talk about money
Above all, make sure you talk openly about money with your kids. Communicating your financial experiences and financial standing when appropriate is a great way to develop your kids’ financial literacy. It is sometimes considered taboo to openly discuss finances, but detailing your financial decisions, plans and experiences—both good and bad—is vital to growing and learning. Starting that line of communication early with your child can help positively shape their understanding of financial planning.