By teaching your kids about money from an early age, they will be able to grasp its importance. Money plays a big role in our lives. From saving, spending, and investing, the talk of money is heard everyday and everywhere. Educating children about money can encourage them to start saving and also help them realize the value of a dollar. There are many ways to do this.
If you give your children an allowance, explain to them why they are getting an allowance. They may question about what they can do with the money that they earn. Depending on the age of the child, an allowance can be either used for school lunches and weekend money or just deposits made into a piggy bank for rainy days. Regardless, children can have their own money, and with enough guidance can appreciate it and can really set a goal for how they plan to use it.
Know the Denominations
When giving your child money, separate bills into denominations and add together how many $1 bills make up a $10 bill. By breaking bills into smaller denominations, kids also have the option of putting aside $1 for every allowance they earn. This dollar put aside each time can introduce a young child into the world of saving.
Money Intentions
Set goals with your child based upon what his/her goals are. There is a difference between what a person needs and what a person desires. Explain to your child that when you earn a paycheck, there is a certain pot of money that goes to essential items such as groceries or electric bills. There is also another pot that is used for money set aside. This pot of money is mostly needed for things such as vacations or saving for a newer car. Ask your child to separate his/her money into separate pots. This will give children an early indication of what it means to spend and save.
Going To The Bank
If your child is old enough to accompany you, why not go to a bank and open a savings account for them? This may seem like a very big deal to a child and it will open their eyes to the world of banking. Seeing that he/she has money in a big financial institution will make him/her feel like such a big kid!
Plus, this money can begin earning interest for them early on. If you eventually want your child's savings to go towards college expenses or similar, it's a great idea to get it in a savings account as soon as possible. Consider a high-yield savings account, so your child's money can earn as much as possible.
Going To The Grocery Store
Grocery store trips happen more often than not for a family, and it can also teach kids about how many is spent in a real-life setting. By going through each aisle and looking for the items that are indicated on the grocery list, kids can see that items can be priced at different values. At the checkout counter, your son or daughter will witness how the groceries add up, too.
When To Get A Debit Card For Your Child
A young child definitely doesn't need a debit card, but a teenager may need one if they have a job. Any income that your child is getting, unless it is cash, will come into a checking account. As such, they need to have one open in order to get most jobs.
Your child won't be able to open their own checking account until they turn 18. Until then, they'll need you to go with them to open an account. Many financial institutions have special teen checking accounts. These checking accounts are often more limited than an “adult” checking account, but function in much the same way and come with their own perks.
When your child gets a checking account of their own, talk to them about using the money they earn responsibly. Having a child with their own debit card can be scary, but hopefully the financial lessons you've instilled in them from an early age will help them stay responsible. Make sure they understand that they will be responsible for the payments that they make. If they purchase something they cannot afford, it is up to them to deal with the consequences.
Teaching your kids about money (especially saving) can never be a bad thing. An early education will benefit them for the rest of their lives. It will put them ahead of many of their peers, who do not get any substantial financial education until high school or later. Many Americans are not knowledgeable on financial topics; don't let your child be one of them!
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