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Parents/Teachers

One of the most important life skills children need to learn is how to manage money. The habits and know-how a child develops growing up could lead to a life of financial security or financial worry.

Understanding basic concepts about money management is a necessary step to building a financial future.

Early planning is key. Review the following age groupings to develop a money smart plan of learning for your child.

AGES 3 – 5

The time to begin teaching money skills is when your child begins showing interest about money. Take advantage of every situation that arises. For instance, you can turn a shopping trip into a lesson on making choices about value and quality. You can teach your child to identify the forms and values of coins and bills by providing a small amount of money to make a purchase.

AGES 6 -10

By age 6, your child may be ready for an allowance (check out Allowance Talk). Begin to stress the importance of savings and help your child develop savings goals such as a special toy. Keep savings in a jar or piggy bank then take your child to your local NBRS Financial branch to open their own savings account. Begin monthly visits to your local branch for deposits.

Next, start involving your child in real life lessons by assigning a task at your local store where your child will pick out an item and compare pricing to learn the value of searching for the best deal.

Finally, begin to include your child in family discussions about financial matters. For example, have your children help you plan the family vacation: Should you camp or stay in a motel?

AGES 11 – 14

During these ages, children typically have more cash to deal with along with the maturity to begin making decisions about how their money will be handled. Give your child control of money and room to make mistakes and learn lessons.

Increase the amount of your child’s allowance and add responsibility by requiring your child to pay for their own school lunches or other needs. Make the allowance enough to cover a special treat or entertainment. Let your child decide how their extra money will be spent: movies, video rentals, snacks, etc. Provide more decision-making opportunities by setting a spending limit and letting your child shop for gifts for others.

Continue to stress the importance and value of savings. If your child wants something that cost more than you are willing to spend, suggest ways to earn the difference.

AGES 15 – 18

Teens are likely to have money coming in from a part-time job or babysitting. This would be a good time to open a checking account with your teen. Be sure to teach your child how to keep accurate records and about the importance of balancing their check book.

Give your teen more responsibility for handling money and making decisions. An older teen can shop for school supplies and clothes, with an expanded allowance.

You may even consider letting your teen use your credit card on occasion and teaching the cost of credit by passing on the interest rate for costly items.

Allowance Talk

One of the best ways to teach money management skills is to give your child cash, along with control over how it is handled. This way, your child is learning decision-making, budgeting and the value of savings.

To make an allowance a learning tool, try the following:

Do not tie allowance to everyday chores. Chores should be a part of the child's responsibility as part of a family.
Clearly explain what the allowance is expected to cover. Is your child supposed to buy lunch with it? Is it for clothes or shoes or just for personal entertainment and treats?
Encourage your child to save 10% - 20% of the allowance in their Kids Bank savings account.
Provide guidance, but leave the final decision on how the money is spent up to your child (unless the purchases are unsafe or against your family principles).
Allow your child to make mistakes. They can be a powerful learning experience.

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