We’re here today with our financial expert from UFCU, please welcome UFCU Financial Health Program Manager, Monica Munoz Andry.
Today, Monica is here to talk to us about raising money-smart kids.
What are some of the challenges that parents often face when teaching their kids about money?
A lack of time and lack of confidence in their own money management skills are often two top reasons parents find it difficult to talk to kids about money. Don’t let these things deter you. You can teach kids about money by:
- Modeling the behavior — Use everyday excursions and online shopping to talk to your kids about money choices and make a commitment to model the lessons. There should be harmony between what you tell your children to do and what you do.
- Or use explicit messages — by setting specific rules on when money and or allowances should be used and for what expenses.
How can you introduce kids to earning Money?
In order for kids to learn about using money, they have to have access to it. This is a great way to teach them that income is limited, and not growing on trees so to speak. Because so many of us use debit cards, the tangible loss felt when your cash is gone is a foreign thing to our kids now days, all they see is the swipe and not the mechanisms behind it. Helping kids understand that income is finite is a great place to start. Common ways that parents introduce kids to earning money is by:
- Giving an allowance — a common practice is $1 per year of age
- Doing extra chores around the house
- Incentivizing desired behavior like rewarding a child for reading books or accomplishing a special task
- Encouraging a part-time job
Okay, so now that they have access to money, how to you teach them to use it?
Creating a spending plan is a great way to teach kids that spending should be controlled, and that some income should be saved.
- Determine allowance details and talk about what expenses the child will pay for with their allowance.
- Create spending, saving, and sharing boxes or jars and teach them the habit of paying themselves first. This is a great time to open a kid’s savings account with UFCU or your local financial institution.
- Provide advice, but let kids learn from mistakes.
- Try not to bail them out, but if you do, introduce a learning moment by offering a loan and charging interest.
How can we teach our kids to be savvy consumers?
When shopping,
- Implement the “Buy One Thing Rule”
- Be okay with saying no
- Encourage waiting
- Teach kids about advertising — discuss commercials. Talk about the quality and usefulness of products and teach price comparisons.
By using everyday teachable moments, you can teach your kids important financial skills to navigate life.
Again, we’re thrilled to have UFCU representative Monica share financial advice with us, regarding raising money-smart kids.