Good money habits are important, and teaching them to your child early on sets your child up to be a financially savvy adult.
Fortunately, children are naturally curious about how the world around them works, and you can use this to your advantage. Below are some ideas to use when teaching your child about money.
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The Three-Jar System
The three-jar management system is an ideal way to teach kids how to count money and budget. Help your child set up three jars, each with different labels: spending, saving and sharing. When your child receives money, whether it’s an allowance or a gift, help them decide how much to place in each jar.
You can talk about how the money in each jar is to be used and why it’s important to set aside money for all three. This is a simple way to drive home the messages of saving and sharing, and the benefits of doing so.
Teach by Example
One of the best ways to teach kids good money habits is to practice good money management yourself. Your child watches you more than you think, so showing them savings in action can inspire them, too. Here are some quick and easy examples:
- Take a small amount of money and show how spending now may mean there will be less money later for something else, such as a vacation or a more expensive new toy.
- Explain how the household finances work. You might discuss how each time you air dry clothes instead of using the electric dryer, you save money on your electric bill. Show your child how this can add up over time. Take a look at your electricity bill together to show them how much electricity costs.
- When you go grocery shopping, ask your child to be in charge of making sure you don’t go over budget. You can give them a calculator to add up your purchases as you shop. Show them how much items cost and tell them why you chose to buy or not buy a certain item.
Set up a PSECU Account for Your Child
When it comes to teaching your child the benefits of saving money, creating a savings account for them can be helpful. Open a Custodial Account at PSECU for your child. If your child is between the ages of 13 and 21, you can also open a regular (non-custodial) joint account.
Set your child up for financial success early by opening a Coverdell Educational Savings Account to help your children pay for future post-secondary education costs.
When your child has their own money, they often become very interested in learning how to manage their finances. Use their account statements to show them how interest works and help them set financial goals to get them excited while they watch their total grow.
Find more money management tips and resources on our WalletWorks page.