Financial Skills for Different Life Stages

Many U.S. schools do not teach basic money management. The only way you can guarantee that your child absorbs this important life skill is to teach them at home. It is never too early to teach your child financial literacy and the value of a dollar. Ideally, you should begin financially educating your children at a very young age and continue to build on that knowledge through adolescence to their teen years.

For a young child, consider getting them a piggy bank to save the money they receive from gifts and small chores, or find underneath the couch cushions. Consider having three different piggy banks: Savings, Spending, and Charitable. Teach them how to count money and help them understand its purpose.

Once your child reaches adolescence, take them to a local bank and have them open their own savings account. When they want to make deposits or withdrawals, take them back to the bank. With credit cards, ATMs, and online banking, children may not fully comprehend money as a physical asset. By walking into the bank and performing financial transactions there, your child will learn that money is real, not just a number on the computer screen.

Also at this age, consider giving your child an allowance. With an allowance, give them a list of purchases they are responsible for: such as candy at the checkout counter for younger children or outings at the movies for older children. In addition, teach your child the value of money that is earned by raising their allowance as the chores they are responsible for increase.

By the time your child is in high school, they should learn how to read and comprehend a bank statement, balance a checkbook, and write a check. Encourage your child to set saving goals and reward them for reaching the goal. For instance, if your teen wants a new iPod or cell phone, have them save their money and then consider rewarding them with a dollar-to-dollar match.

As we all know, there is a big difference between the money we are given, perhaps as a gift, and the money we earn. The same can be said for children. By strongly encouraging that they work, your child will quickly learn and appreciate the difference between the money they receive as an allowance and the money they receive from doing chores or having a summer job. This is an important lesson for children to understand and the only way it will resonate is if they work for it.

Most importantly, do not be afraid to talk to your child about money. Discuss with them the costs for dining out, vacations, college, etc. Explain your priorities and your decision-making methods when it comes to spending money. Furthermore, be sure to lead by example. Do not lecture on the difference between “wants” and “needs” and then charge an impulse purchase to your credit card.

Another way to make sure that these lessons and skills are learned is to let kids make and live with their mistakes. For instance, if your child buys a new video game or toy that they end up thinking is boring or purchase a new candy that they think tastes gross, do not give in and buy them another toy or candy bar. You can make suggestions about what they could do now, like maybe they can return the item or learn from the mistake. However, it is key that you do not pass judgment. It is important to encourage good fiscal behavior, so help your child recognize the mistake and learn from it.

Still unsure where to start? Luckily, there are tools available that can help. Visit www.themint.org for a variety of games, activities, and quizzes for children and teens of all ages. Even better, they provide helpful tips for parents teaching their children about financial literacy.