Teaching Your Kids About Money
It's not just a nice idea to teach kids how to handle money and credit — it's essential! Teen spending in the United States — products bought by and for teens — totaled $259 billion in 2022, according to MarketingVOX/Rand Research Center Reports. Clearly, they know how to spend. What we need to teach them is how to save, invest and live on a budget.
Check out the following topics by clicking on each header below to expand for more information:
Everyday Teachable Moments
In many families, money is a taboo topic. But you can help your children and grandchildren learn financial lessons that will last a lifetime by looking for teachable moments in your daily life that naturally bring up the topic of money. Here are some examples of teachable moments to help you get started:
When depositing your paycheck or verifying direct deposit via online statement, talk to your kids about:
- How your paycheck is deposited into your checking or savings account. If you use direct deposit, explain how this electronic method is convenient and secure.
- Budgeting some of your paycheck to pay for things like housing, food, and clothing.
- Saving a portion of each paycheck for emergencies and building a nest egg for future expenses like college tuition and retirement.
When grocery shopping, talk to your kids about:
- The difference between a need and a want — milk is a need, candy is a want.
- Using coupons, buying in bulk, and other ways that you save money on groceries, etc.
When using your credit card, talk to your kids about:
- Paying for these purchases each month when the credit card statement comes in the mail.
- How using a credit card is like taking out a small loan for each purchase.
When giving children an allowance, talk to your kids about:
- Setting up a budget. For example, decide how much to save, spend or share with others in need or a cause that you care about.
- Setting a financial goal, such as buying a new bike, and figuring out how to achieve it.
When you pay bills each month, talk to your kids about:
- How a check or online payment is taking money out of your account at the bank to pay the bill.
- Keeping track of the checks you’ve written and the online payments you’ve set up in the check register so that you don’t spend more than you have in your account.
When using an ATM or paying for a purchase with your debit card, talk to your kids about:
- How the money is coming from your account at the bank.
- Recording withdrawals and debit card purchases in your check register so that you don’t overdraw your account.
Early Money Management Habits for Kids
There are many events in children’s lives when good money management skills can be fostered. By constant repetition, these skills will develop into life-long habits. Consider a few opportunities to reinforce messages:
- Piggy Banks — The First Lesson in Saving: The arrival of a child’s first piggy bank teaches at an early age that pennies, dimes, and nickels can add up to dollars pretty quickly.
- Weekly Allowance — Spend Some & Save Some: Help children see the value of spending a little now and putting some aside to spend later. Giving some to a worthy cause can also be suggested. If you provide your children with an allowance, you can start them off right by requiring them to budget and save a portion of it.
- That First Job — Time to Open a Bank Account and an IRA! : Ask a young person what he or she will do with the income from their first job, such as babysitting or doing yard work for the neighbors. Encourage them to think about their spending and savings options. Many teenagers today make enough money to open their own checking account or a joint one with their parents. It’s even possible to open a retirement account.
- The Big Things They Want — What it Takes to Buy Them: So they want the latest game console or MP3 player. Or maybe it’s a special school trip or even a car someday. Saving for these takes time. Now’s the time to talk about being disciplined to save for what we want and being realistic about our needs and wants.
- Protect Your Financial Information — Don’t Give Away Account Information: Tell children that bank account numbers are secret numbers and should never be given away. Never “mail” letters by putting them into your own mailbox for the postman to pick up. Sometimes thieves look for secret bank numbers in outgoing mail. Tear up or shred any papers with your secret bank numbers, rather than throwing them in the trash. Tell kids that believe it or not, thieves will even go through your garbage to steal your financial secrets.
Teaching Teens the ABCs of Using Credit Wisely
Teens notice each time you pull out the plastic — but do they understand how it works? Probably not. You might be using a debit or credit card — very different ways to pay for things, but to kids, they look the same. Any time you make a purchase, regardless of whether you use cash, credit or debit, there’s an opportunity to teach kids about savings, budgeting, and credit.
Learning about credit cards and debit cards is particularly important for teens, with debit cards becoming a very good option over credit cards. In fact, according to the most recent nationwide survey of high school seniors, the Jump$tart Coalition® for Personal Financial Literacy found that students’ use of debit cards has skyrocketed. Some 53.3 percent of respondents reported having a debit card compared with 35.9 percent just six years previously. Teens and their parents are realizing that a debit card can be a very valuable budgeting tool since cardholders can only spend what is already in their account (unless there are special overdraft features of the card). As kids mature, a credit card will be an important option in order to establish a credit history that may be necessary to rent or purchase a home. Some 55 percent of college seniors have a credit card of their own. The credit history may even be checked by a potential employer. Thus, helping your teens develop good credit management habits will help them avoid serious consequences that can last for years.
An opportune time to talk about spending and using debit and credit cards is before shopping for school clothes. Talk about:
- How you will pay for the purchases — debit or credit.
- Budgeting — these are anticipated expenses that can be planned for in advance.
- Having a limit on what you’ll spend.
- What you or your family might need to cut back on or do without to cover these expenses. Children only see what you buy and not what is given up.
If you use a credit card, help your children understand that you are taking out a small loan. Paying your debts on time and keeping your credit history strong is another important message. And tell them what the real cost will be for your purchase once the interest charges are added on.
Here are a few quick questions your teen could ask himself or herself when shopping:
- Do I really need this item now?
- Do I have enough money in my debit account or in my budget this month to pay off the entire purchase?
- If I use a credit card, what additional fees or interest will I pay to carry a balance?
- What will I have to give up in order to buy this?
Keys to Financial Health
Understanding and Using Credit
- Credit Dos and Don'ts
- A Few Things You Should Know About Credit
- Financial Stress Test
- What to Do if You Need Help
- Budgeting for Your Future
- Detailed Monthly Budget Worksheet
- Establish Good Saving Habits
- Family Savings Goal Worksheet
Protecting Your Financial Identity
- Simple Steps to Protect Yourself
- Take Action if You are a Victim
We offer free online and in-person engaging workshops that cover different topics such as saving, budgeting, and identity theft. These workshops and presentations can be held all year long all around the state of Maine.
- Grades K-8: Teach Children To Save
We are a proud participant of the ABA Foundation's Teach Children to Save, which is a national, banker-driven financial knowledge campaign for kids in grades K-8. We use the Foundation's turnkey resources to lead lessons for youth in their community on financial topics, including Banking Careers, Interest, Making Decisions, Recognizing Money, and Saving for the Unexpected.
- Grades 9-12 & Young Adults: Get Smart About Credit
We are a proud participant of the ABA Foundation's Get Smart About Credit, which is a national, banker-driven financial knowledge campaign for teens and young adults. We use the Foundation's turnkey resources to lead lessons for youth in their community on financial topics, including Banking Careers, Budgeting, Credit Scores, Identity Theft, and Paying for College.
- Grades 11-12 & Young Adults: Smart Budgeting Workshop
In this engaging workshop, students will explore how keeping a budget, using different types of bank accounts, and making financial goals can give them better financial health over their lifetime.
- Grades 11-12 & Young Adults: Careers In Banking Workshop
During this presentation, students will be introduced to the importance of developing a relationship with a bank and explain some of the services banks offer young people. They will explore many careers in the banking sector and how they call upon a variety of skills beyond just an affinity for finance.
- Grades 11 & above: Identity Theft Workshop
In this engaging workshop, participants will learn about the methods used by identity thieves to steal personal information and how to protect themselves. They will also understand what information is at risk and red flags to watch out for with regard to common scams.
- Safe Banking for Seniors: Understanding Powers of Attorney Presentation
This module explains the role an agent with power of attorney plays in handling financial matters or healthcare decisions when the grantor is no longer able to do so. It also addresses the qualities seniors should look for in an agent and the financial planning that can make the agent’s job easier.
- Safe Banking for Seniors: Choosing an Executor Presentation
This module explains the role an executor plays in managing the estate that’s created at the time of a person’s death. It also addresses the qualities seniors should look for in an executor and the financial planning that can make the executor’s job easier.
- Safe Banking for Seniors: Identifying and Avoiding Scams Presentation
This module explains the reasons seniors are targeted by scammers, the warning signs of scams, and how seniors can protect themselves.
- Safe Banking for Seniors: Preventing Identity Theft Presentation
This module explains what identity theft is, how it can occur and how seniors can protect themselves.
- Safe Banking for Seniors: Choosing a Financial Caregiver Presentation
This module explains items a senior should consider before choosing a financial caregiver.
- Safe Banking for Seniors: Acting as a Responsible Financial Caregiver Presentation
This module explains the roles and responsibilities of those acting as financial caregivers
You can submit a request for any of the above presentations and we will reach out to you to plan an event.
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Some of this content is from © 2014 American Bankers Association, 1120 Connecticut Ave NW, Washington, DC 20036. All rights reserved.