6 Ways to Introduce Financial Concepts
Real-Life Transactions
This simple lesson can exemplify the value of a dollar. Take your child to the grocery store, and let them pay in cash, count bills, check receipts, and understand change. If you're budgeting, use this to discuss how grocery shopping fits into the household budget.
Learn Through Allowance
Giving your child an allowance can provide a simple lesson on income. Have your child complete chores or other small tasks to earn an allowance. Pay per task or a set amount once all tasks are completed, whatever you prefer.
If tasks are not completed, don't pay your child for that particular task. If they go above and beyond, give them a few extra dollars as a bonus! This is an excellent way to show the correlation between working and earning money early on, setting your child up for a successful future.
Savings & Banking 101
Want to teach your child about saving and banking? Start by visiting your local FSB branch. Here, you can help your child open their very first youth savings account.
Plus, we're always here to chat and help them understand:
- How a bank account actually works
- The fun of seeing your savings increase with each deposit
- How to easily read and understand a bank statement
Smart Spending Habits
Before your child rushes to make a purchase, it's essential to instill smart spending habits. Encourage them to take a step back and reflect on the desired item for a day or two. This simple pause can help them evaluate their real wants, leading to smarter money choices.
Discuss Monthly Bills
Most parents don't want their children to know the burden of monthly bills from a young age. Instead of making this a taboo topic, encourage your children to ask what each bill covers, how often you pay it, and why it’s a service you need. These conversations can provide meaningful insights into bills that power everyday life (water, electricity, gas, mortgage payments) and bills that are “extras” (streaming services, gym memberships, cleaning services).
And once they get a little older, you can show them when and how you pay these bills. Do you use online bill pay? Mail a check? Auto-draft from your checking account? Talk about the importance of due dates, paying bills on time, and possible repercussions for not doing so.
The Credit Talk
A lack of awareness about what credit is, how you establish it, and the impact of bad credit plays a significant role in bad financial habits. Often, young college students who don't know the ins and outs of credit cards will get sucked into all the card offers coming to their mailbox.
To break it down:
- Discuss credit cards' purpose and risks.
- Introduce the idea of "buying on credit" with a simple activity. And if they can't repay quickly, introduce a small 'interest' amount.
- Consider providing a student credit card with a low limit for older kids, emphasizing responsible usage and repayment
- Important Note: When the statement arrives, help them understand what they spent and how to pay their monthly bill to avoid excessive interest charges.
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