Have you wondered about when to teach children about money? Having allowances can help children understand the concept of budgeting and saving, but you have to teach them.
The concepts of money and time can be hard for children to grasp. Research has shown, money education should be timely and ongoing or the information may not stick with them. To help with that, if you know your child will be receiving a check for their birthday, talk to them about saving or budgeting right before the check is received.
If you decide to give an allowance, start one as soon as your children start recognizing money's worth--kids do this fairly early. Janet Bodnar, deputy editor of Kiplinger's personal finance magazine in Washington, D.C., stresses two points in her book "Dollars & Sense for Kids":
- Don't give an allowance until children are old enough to manage it, or until your children are at least six years old. There's no need to rush things and preschoolers generally don't understand the abstract idea of money anyway. Once children start first grade they begin learning about money in school, so they know if they get a $1 bill each week, it's equivalent in value to ten dimes or four quarters.
- Keep the system simple so you can manage it. "Denying kids an allowance doesn't make it easier to limit the amount of money they get their hands on," says Bodnar. Because most children will get the money out of parents anyway, it's better to teach them how to manage it themselves than allow them to nickel and dime you to death. Plus, using an allowance gives parents and children more control over the children's finances.
Here are a few easy ways to help the next generation and teach children the importance of saving from a young age.
Start with a Piggy Bank
A piggy bank is an easy way to teach kids the importance of saving. Let them know that the goal is to fill up the piggy bank with dollars and coins, until there is no room.
Open Up a Credit Union Youth Savings Account
Once the piggy bank is full, take your child to the credit union to open up a youth savings account for them. Have them count how much money is going to be deposited, to help them get physical understanding of how much money they have.
Use Savings Jars
When your children really want the latest and greatest toy or a new video game, let them know they will have to save up for it. Give them a jar with the picture of the item as a visual reminder. Offer them a small allowance each week in a denomination that encourages savings.
Weekly Money Saving Challenge for Kids
Another fun way for children to save is to set up a weekly money saving challenge. Each week your child can check off the amount and at the end of the year they will have saved $344.50. This is something they can do at home using a piggy bank, an envelope, a shoebox, or opening a savings account. If they choose, they can wait until the challenge is complete to open a savings account and deposit their savings.
The savings chart can be a fun way for kids to watch their money grow! Click here to printout the Weekly Money Savings Challenge chart to help get your children started!
Contact ECU Credit Union at 1-800-382-2400 or www.ecucreditunion.com for information about setting up a savings account for your children.