Talking about money, especially in times of a family budget crunch, is an opportunity to teach kids lessons that can last a lifetime.
As regional director of Self -Help Credit Union, Tamara Stanley understands the importance of financial literacy. Stanley is a mom of two and in her household those lessons started early, so she helped us develop an age-by-age guide to talking with kids about money.
Preschool
Preschoolers are just beginning to learn the concept of money. You can help them learn both through pretend play (grocery store, play money, etc.) and in more tangible ways like using a piggy bank to save for a special toy. When her children were 3 and 5 years old, Stanley set up her own system to help them learn a little about saving and spending. She created a system of chores and attached a salary to each chore. She paid the kids with pretend money and allowed them to use that money to buy snack food.
“They need to understand that you have to work for it!” she said.
Elementary School
As children enter elementary school, you can expand on the lessons of saving and spending by setting goals and saving.
“It is important that they know what they are saving for,” Stanley said.
Elementary school is also the time to upgrade the piggy bank to a savings account. At Self-Help, the minimum required deposit is only $5, The account must be a joint account with parents. Stanley recommends setting a savings goal and saving at home before opening an account.
“We have a Fun Card that has 40 slots for dollar bills,” she said. “When a child has filled up their card or saved $40, they can take it to a bank or credit union to open an account.”
Middle School
Once a child reaches middle school, it is time to begin talking about different types of accounts, like checking, savings and high yields savings accounts. Many banks and credit unions have options for checking accounts for kids that still allow for parental control. Some offer a debit card and online banking access to further increase financial literacy. Middle schoolers are also old enough to begin learning about credit.
“I compare credit to a report card,” she said. “You want to attain a high score.”
High School
In high school, kids are ready to learn a bit more about the social and emotional aspects of finance.
“Wealth doesn’t always mean having a lot of money,” Stanley said. “It is all about how you budget and spend. Someone may appear to have a lot of money, but have a lot of debt.”
Stanley added an important life lesson: having a lot of money does not always equate to happiness.
High school is a time to really talk about needs versus wants, Stanley said. During high school, you can also expand your credit conversation to include strategies for building and keeping a high credit score. Outside jobs can afford the opportunity to talk more about savings and for teens to start learning about taxes.
Talking about money is important – no matter what
Regardless of a child’s age, when a family’s financial situation changes, it may require hard conversations. Whether due to a job loss, health crisis or changing economy, it is important to communicate with kids when spending habits must change.
“It is a good opportunity to explain to kids why savings is important – you never know when circumstances may change,” Stanley said.
In addition to dipping into savings, circumstances may require a bit of belt-tightening. In that situation, Stanley recommends focusing on the things that you still have and talking with the children about ways that you can work together as a family to decrease spending. She also recommends looking for fun alternatives: “We may not be able to eat out as much right now, but we will cook some great meals together and have fun while doing it!” And if you can’t take the family vacation, maybe you go somewhere closer to home for an adventure.
Self-Help Credit Union is a nonprofit community development lender, real estate developer and credit union that serves communities traditionally underserved by conventional markets. It has branches in North Carolina, South Carolina, Florida, Georgia and Virginia. Learn more at self-help.org.
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