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By Megan Renart
Tell me, and I will forget. Teach me, and I may remember. Involve me, and I will learn.
— Benjamin Franklin
It’s happened to almost all parents – your son or daughter repeats a word or phrase they’ve overheard. It might not even be a “bad” one, but it catches you off guard.
Kids are sponges, constantly soaking up the scenery around them, from words to facial expressions to body language. Just as your children pick up on the behavior you model, they’re also picking up on your financial attitudes and habits. When you start their financial education and deliberately model good habits when they’re young, you’re setting them up for success. In-the-know kids will become in-the-know adults.
“The value of a dollar can be a difficult thing for children to understand. That’s why it’s imperative to start the conversation early,” says Ingrid Bruns, a personal finance advice director for USAA.
You’re working hard to build a financial foundation for your family that will sustain and protect them as they grow. You’re motivated to help your children not only become self-reliant but prosperous. A proven way to ensure your efforts are fruitful is to provide consistent opportunities for children to apply financial knowledge in real-life ways.
Spend a few weeks developing an awareness of your own relationship with money. What are the comments or conversations you have with your partner? Is there tension when paying for things or discussing bills? How do you pay for purchases – with cash, debit or credit? Do you have a budget? Do you talk about savings in front of, or with, your family?
Even if you don’t feel at ease when it comes to money, you can engage your children in a number of ways that remove some of the mystery that can intimidate people.
“Some may have reservations about sharing too much with children – especially the youngest ones – but consider having a general conversation about how Mom and Dad go to work, get paid for that work and how that pay has to be divided up (in a budget) to pay for everything,” Bruns says. “Point out things that had to be planned for, such as a house, car, vacation, etc.”
Rather than just doling out an allowance, you can create opportunities for even your youngest to earn money by doing chores. Once they have their allowance in hand, teach them how to spend, save or share appropriately.
Under 10 years old
Bruns suggests labeling three clear jars as “Spend,” “Save” and “Share.” A good rule of thumb is 70% Spend, 20% Save, 10% Share, but that could be tweaked because your little ones probably don’t have bills or big-ticket items their spend portion must go to. Also, as they plunk bills or change into the jars each week, the clear jar is an excellent visual for monitoring growth.
10–13 years old
This is a great time to educate them on trade-offs. If a particular item is wanted, they could get it only after deciding what they’d need to give up to afford it.
14–18 years old
At this age, kids typically can handle the responsibility of managing a bank account. “If they’re managing a checking account, they can also manage a savings account to keep money separated for each purpose – just like the toddlers with their three jars,” Bruns says.
She adds that each of her children opened a checking account and had a debit card for access to their money, “but we put ‘governors’ on the cards, so they couldn’t spend more than a certain amount each time or exceed a certain value each day. We monitored activity.”
Sometimes, of course, your kids need to learn from what you don’t allow them to spend money on. “This is an opportunity to have a high-level conversation about budgeting and how that purchase doesn’t fit into the current family budget,” Bruns says.
If it was something they really wanted, Bruns adds, they could create a plan to earn additional money and save for that specific item. That’s a lesson that will carry them far into adulthood.
Ingrid Bruns is the director of personal finance and military life advice at USAA, an Accredited Financial Counselor and also holds the Accredited Domestic Partnership Advisor designation. Prior to joining USAA in 2013, Ingrid worked as a personal finance counselor for service members and their families as a Department of Defense contractor. Before that, she was the director for the Stuttgart, Germany, USO, where she worked to help provide a “home away from home” for military families.
Post originally published in 2019 updated in April 2022.
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