Teaching your child how to be responsible with money can be challenging, especially when you feel like you don’t know what you’re doing. Vicky Aragon, the Vice President of Young Americans Bank, weighs in with some helpful advice about discussing money and money mindfulness with children of all ages.

 

How do I teach my elementary or middle schoolers about money?

It can be extremely difficult to teach a very young child the value of money, especially with physical money becoming less and less prevalent with the rise of debit and credit cards, but luckily for us, it isn’t impossible.

 

Get a Piggy Bank

The classic piggy bank or a clear plastic jar serves as the perfect starting point for introducing saving and budgeting. If your child has been begging for a new gaming console or toy, this is the perfect avenue for teaching them the value of money.

Aragon suggests teaching them the value of coins and bills and how to count them, having the item they want be the goal for saving. Setting small weekly saving goals will help them understand how to properly save money and discourage impulse buying. Once they have enough money to reach their goal, they will have a new appreciation for spending and more respect for you and your money.

 

Visit Your Local Bank and Use Its Resources

When you visit your bank or ATM, allow your child to come with so he or she can have first-hand experience talking to a teller and getting their questions answered.

“I think it’s important to take them to the bank with you and talk to them about your transaction and why you are doing it,” advises Aragon. “Set up a savings account in their name to get started. Have them keep some of their money for everyday spending and put some aside in the account for building savings.”

Plenty of banks offer checking accounts to young children, with Young Americans bank allowing 10 year olds to have their own checking accounts. Once they’re old enough to move on from the piggy bank, this can be a great way to teach them about managing an account before they ever get their first wage.

“It is important to start early and teach them how to use a debit card and track their spending. When it’s their own, you can teach them to be responsible with their money at a young age,” says Aragon. “At account opening, we teach them about all aspects of their account, including debit card usage and tracking, online banking, reading a statement, the parts of a check, and red flags to look out for to ensure they do not fall victim to scams or fraud. We also offer free online resources for kids of all ages including age-specific Money Matters classes.”

 

What about high school students?

As high schoolers begin working their first jobs, getting that first paycheck can be very exciting. Teaching your child about spending and saving wisely now will make all the difference.

 

Set up a Checking and Savings Account

If they don’t have checking and savings accounts now, this is the time to open them, as many first-time workers will be offered direct deposits, making seeing and spending their money much easier. With a savings account as well, your child can have a large chunk of change saved up for college or other big purchases if they play their cards right.

Aragon suggests having a portion of their paycheck deposited into checking for everyday expenses and another portion deposited into savings to help build it up. Having this system in place will help build good spending and savings habits to carry into adulthood.

 

Discourage Impulse Buys

In the age of social media where influencers push products and lavish lifestyles are on full display, your child can easily fall prey to predatory marketing and advertising which will quickly drain their funds.

With established checking and savings accounts, impulse buys will be a lot easier to cover. Helping your child come up with a budget will show them how much money they truly have to play with after paying for daily, weekly, and monthly expenses. Aragon recommends their budget last a full pay period so that if it is all spent, your child will learn first-hand by struggling until their next paycheck. This struggle will teach them how to plan ahead and really mind their money before reaching adulthood.

Additionally, having good money sense boils down to understanding the difference between wants and needs but also understanding that it’s okay to splurge occasionally if it won’t put them in the red financially.

 

And my young adult?

With going to college, young adults finally have complete control with their money, which can be both rewarding and dangerous. As parents, it’s our responsibility to set them up for success but not coddle them too much. Unfortunately, there is a hazy line between these two because we love them and want to help them.

 

Discuss Student Loans and Plan Ahead

Paying tuition out of pocket can be risky to some students, and applying for student loans is dooming to some. However, there are plenty of ways to make smart decisions regarding payments and loans when caution is exercised.

“My advice around student loans is to immediately develop a plan for paying them back. Don’t wait until after the deferral period to make a plan. Set aside money every month, as if it is a payment, into an account that is specifically for the student loan,” says Aragon

 

Cast a Credit Line

Of course, this is the time for your child to finally have their own credit card and the responsibilities that come with it. After helping them choose a good card and getting everything set up, make sure they understand that this is borrowing money. 

First purchases shouldn’t be anything too expensive. Starting out using a credit card to pay for gas, coffee, or groceries is low-risk and easy to keep track of. Aragon notes that while a credit card can be dangerous, if it is used correctly, it can set them up for success in the future. She also recommends teaching your child the importance of making payments on time, if not early, and always paying more than the minimum due up to the total balance.

 

Be Kind, Open, and Talk to Them

Ultimately, being honest about your finances and your past struggles will teach your kids to both avoid mistakes and how to handle them when they happen. When they do make a mistake and need your help, it’s okay to help them out now and discuss the consequences later.

“Teaching your children about money and finances is one of the most important things that you can do to help them to be financially successful in the future,” states Aragon. “Talk with them about the mistakes that you made to help them avoid the pitfalls, and let them know what you did right to make life easier. Finances will be a part of everything that they do in life and establishing good habits early is the key to success.”

This article was originally published in April 2023.