Sometimes it seems like the world is full of people who don’t know how to manage their finances. Many of us have our own struggles with saving or spending, and even uber-rich celebs frequently file for bankruptcy. You want better for your kids, but where do you start?
Investopedia advises that parents play an important role in helping kids begin their financial lives on the right foot and that actively engaging kids in finance-minded activities can help them be better with money later in life. Below are a few suggestions that teach valuable lessons about personal finance.
1. Make groceries a game
This suggestion from Investopedia has multiple incarnations. Whether you give your kids a budget and tell them to find the first three items on your shopping list within that budget or try another variation, kids can start to understand the cost of food, the concept of savings and other key ideas. Other versions of grocery games include:
- Giving your kid a budget and asking them to find as many items on your local food bank’s list as they can without exceeding that budget
- Having them pick out items on your list, total the amount and then try to get the items for $X less by swapping and substituting different options
- Calculating the unit price for different sized packages to determine which purchase is more cost-effective
2. Make allowance a thing that’s earned
Instead of just giving your kids money each week or month, link specific monetary rewards to specific chores and responsibilities around the house. This helps kids understand the link between time, labor and earnings that even some adults can’t seem to grasp!
First Arkansas Bank & Trust actually allows you to set up recurring payments for allowance deposited directly to your kid’s account. Speaking of your kid’s account…
3. Set up a bank account for your child
Setting up a bank account in your child’s name and enabling them to check the balance teaches the importance of financial awareness. Have kids check their balance before and after making a purchase. Older kids can even get a debit card if they’re responsible enough.
Watching the balance will show kids how saving more means accruing more interest and how spending all of your money means that you might not be able to buy things you want in the future.
Speaking of bank-account blowouts like that – don’t interfere. Allowing kids to learn organically about the decision cost associated with their choices is the only way they’ll learn to consider purchases more carefully in the future.
4. Use apps to augment your lessons
Kids love playing on tablets and phones, so why not harness that affinity to impart crucial lessons? FAB&T Jr. is one example of an app that teaches key lessons in a fun way. Kids can start a Cash Club savings account at FAB&T with as little as $10, and then use the FAB&T Jr. app, available on both iTunes and Google Play, for functions like:
- Virtual Money Tracking, saving hassle and tears over lost cash
- Account information accessible from any Android mobile device
- Goal setting and tracking
- Virtual Allowance Tracking
- Age appropriate games
$10 is a small amount of money, but setting up a savings account for your kid can teach big lessons in financial management.
5. Be a role model
“Do as I say, not as I do” is never a very convincing approach. By avoiding bad debt, budgeting carefully, saving for retirement and taking other financially-savvy actions when possible, you can be a great role model for your kids.
If you don’t know where to start, look online or talk to an expert like those at First Arkansas Bank & Trust. They can help you access your current situation, set goals and take steps toward achieving financial security, just as you hope your kids will one day.
6. Play games that encourage financial thinking
You can also get kids set up in a virtual stock market where they can learn the thrills and disappointments associated with investing, minus the risk.
No matter what approach you take, the most important thing is making an effort to educate your kids about the value of money, the power of saving, the dangers of too much debt and other crucial lessons in personal finance.
To get your kids started with a bank account through FAB&T’s Cash Club, visit fabandt.com or head to a First Arkansas Bank & Trust near you. As a pillar of the Jacksonville community for over 50 years, FAB&T is here to help you – and your kids – achieve your financial goals.