Isn’t it odd that financial literacy is an indispensable skill for any adult, yet it is so rarely taught in schools?
Where the system may be lacking, you have a glowing opportunity as a parent to set your child up for long-term financial success. It is never too early to begin educating kids on how to handle money wisely!
A recent report from the University of Cambridge suggests that children’s money habits are formed by age 7. It has also been suggested that parents have the biggest influence on their children’s long-term financial behaviors.
So how can parents harness these formative years to instill successful money habits in their children, guiding them toward long-term financial success independence? Take a look at these five strategies and consider which ones you can adopt with your children to help set them up for their own future financial independence.
1) Create a rewards system
Reward your child for good behavior like clearing the dishes, doing chores, playing nicely with others, or any other behavior you want to reinforce. Say they get one point for cleaning their room, and can redeem that point for 30 minutes of screen time on the tablet.
Whether you use point tallies on a whiteboard, physical coupons you can create together, or another system, this helps instill positive behaviors, and gets them used to the idea of having to work and save money to get something they want.
2) Set savings goals
Have your child imagine something they want, then draw a picture of it or cut it out of a magazine. Make sure it’s something they can obtain after a few weeks of saving, to keep them motivated to save.
Given their allowance or earnings, help them figure out how long it will take them to save up enough to get that item. Keep the image around (on the fridge or near their bed, for example) for added motivation.
3) Take them to the moon!
Give your child a Moonjar*, or a colorful piggy bank that helps them deal with money three important ways: Saving, Spending and Sharing.
This will help them learn not only that saving is important, but that rewarding themselves and helping others in need are impactful positive financial habits!
4) Bring budgeting into your own life
Never underestimate the power of your behaviors on your kids! By talking about your own budgeting regularly, your kids will understand the concept more quickly and be more likely to engage in budgeting themselves.
If they are putting loose change in their piggy bank, set up your own piggy bank and show them when you happily put money in.
5) Give them space to make mistakes
While we want our children to make the right decisions every time, one of the most powerful teachers can be a painful lesson learned the hard way.
If your child splurges on small things and fails to budget for the big toy they really wanted, this could be a great learning moment. Although it may sound harsh at first, it may be better for your child to learn these lessons while they are young and the stakes are low.
Bonus Technique: Join the Club!
Make sure your child is in the uSavers Kids Club! It’s an easy, fun way to help kids get smart about money.
Any child between 5 and 12 years old is welcome to join. And if you join in the next month, you will receive the kid-favorite Making Cents Newsletter packed with fun trivia, coloring contests, prize giveaways, and tons of other activities kids love!
*As a bonus, every child receives a free moonjar when they join the uSavers Kids Club!
For children 13 and older
If your child is thirteen or older, they are getting ready to make some challenging transitions. Check out Financial Firsts, an excellent write-up Marissa created last month. The article covers things like:
- How do you set up a budget for the first time?
- Is it really that important to establish credit?
- What is credit anyway, and how does it work?
- How can I save more money and keep my expenses low while still living the life I want to live?
You’ll find the answer to all of these questions and more at Marissa’s blog!
Posted By: Jacob Schnee
About the Author: Jacob joined Unitus as Marketing Specialist in March 2015 and transitioned to Marketing Communications Specialist in March 2017. His experience has spanned hospitality, business development, consulting, and marketing in various industries along the east coast, west coast and in between. When he is not developing internal and external communications for Unitus, he is engaging in recreational fitness, studying personality types and exploring the outdoors with his wife and dog.