Editor’s Note: This is the first in a series of posts on teaching your kids about money.

As a parent, there’s no bigger challenge—or concern—than making sure you’ve loaded your kids with all the necessary life lessons before they step into the real world. You have such a short time to teach them so much.

One of the biggest lessons is teaching kids about money. Building solid financial habits sets a successful course for their future, so it’s never too soon to teach your kids money the right way. How do you begin? Here are some tips for raising financially literate kids.

Children Learn What They Live

Author Dorothy Nolte, Ph.D., once wrote, “Children learn what they live. Then they grow up to live what they’ve learned.”

That’s why having a set plan for teaching your kids about money is crucial, because the habits they develop when they’re young will stick with them for the rest of their lives. You’re literally setting them up for success!

Here’s a statistic: kids who talk about money with their parents at least once a week are much more likely to feel confident about money (68% vs. 36%) than those who do not discuss finances.

So You've Got a Piggy Bank, Now What?

There’s nothing more exciting than watching a child’s face light up when you place a dollar in his hand. He may not understand the significance of its value, but he certainly knows it’s important.

Now is the best time to talk money. Make time in your week to empower him with financial knowledge. Kids are never too young to learn money: what it’s used for, how to be responsible with it, and why it’s important to find a place for safe keeping.

Let's Find a Safe Place

The first lesson is one she may know already—have a safe place to keep the newfound loot. The problem is, she may shove it in her pocket, stick it under her pillow, or close it up in a book. This quickly becomes the source of heartbreak when she misplaces her precious treasure.

That’s why you and your child need to establish a “bank” for her money; a place it will always go. It can be a dedicated container like a piggy bank, or it could be more of a money management system. You decide how easy or complicated the setup should be for your child.

Three Safe Choices

The good ol’ piggy bank is a great start because it offers your child a safe, dependable location. Don’t have a pig? That’s okay … many suggest using a clear jar because your child can see his savings accumulate. What’s important is establishing that all money goes there, immediately.

Ready for next step money management? It’s time to use a real bank (or better yet, a Credit Union, wink wink!). The lessons of managing money are far and wide, and there’s no better place to start than managing an actual account. Show him the processes: counting and sorting money, meeting the teller, and getting the receipt. It's a meaningful hands-on experience, so be sure to get a pic of him with his first deposit receipt. That's a huge win! You can also introduce your budding technologist to your credit union's mobile app where he can view his saving progress. We generally recommend using the app vs. desktop or browser, especially these days when phones and tablets are much more native to younger users.

Finally, you could choose a hybrid money management approach—a system that keeps a predefined amount of spending cash at home (treat cash) and puts the rest in the bank. Always maintain rules for what gets deposited—especially important for holiday or birthday gift money—and what’s available for spending each month.

Some banks offer youth accounts. At GOLD, we feel strongly about how important it is to get kids experienced with money from the very beginning. That’s why we offer a variety of account options specifically for our youngest Members that are designed to grow along with them.

Now, Make a Plan

Once the money has an established home to keep it safe, it’s time to talk with your child about how she will save, spend, and share her money. As she is growing up, help her to understand the concept and meaning of money.

It's important to teach her to save and grow her money. Saving may come to include: saving enough money for the new bike she's been eyeing, saving up for a vehicle, college, or even a home down the line. When it comes to spending money, teach her to do so wisely. You can pick a dollar amount for her to spend, like $100, and help her to understand the value of that $100. For example, $100 could buy two video games, 5 action figures, or 1 skateboard. Another concept to introduce to her is the act of sharing. Teach her to share by donating some of her money to help those in need of a helping hand.

It helps to have a goal at any age. Help your kids figure out a savings goal, a spending goal, and a sharing goal. With a goal in mind, together you can figure out specific numbers where incoming money gets put: saving, spending, or sharing.

Work Toward the Dream

This is when your money lessons get fun because you can help your kids build their savings, and maybe get some chores around the house done to boot!

Keeping that goal front of mind makes for extra willing helpers. Whether you set up an allowance system for keeping up with weekly chores like taking out the trash, making beds, or keeping rooms tidy, or prefer to pay out only for above and beyond tasks (is that a sparkling clean car in your driveway?), giving kids opportunities to make progress by earning money keeps them motivated. All those little jobs are also preparing them for jobs out in the real world down the road. Speaking of which …

Older kids may be ready for jobs outside the house like babysitting, dog walking, or mowing lawns in the neighborhood. Work becomes much more appealing when they see how it’s helping them reach their goal.

Remember though, it’s very important that you establish a savings-first mentality. Make it clear that any money coming in is treated as savings first, spending and sharing money second. It’s a small but important nuance that sets the foundation for a healthy relationship with money and good budgeting down the line.

Have regular budget check-ins with their savings and chart their efforts in a notebook or on a computer. It will motivate them and keep the money conversation in the front of their minds.

Celebrate Success!

When the day comes when your kid’s savings goal is reached, it’s time to party. Celebrate the fact he had the discipline to save money—it is a big deal. If he’s buying an item, be sure he participates in the exchange of money.

Make a big deal out of having him withdraw his cash and take it to the store. It’s essential that your kid hands over the money and understands what his hard work and discipline looks and feels like. For an online purchase, show what’s happening behind the scenes by completing the checkout process together and connecting the dots to the account activity in online banking.

Now, it’s time to capitalize on this success and set a new goal. Don’t let the good habit die after one go. Remember, this is just the beginning of setting up your child’s relationship with money. It all starts with the smart money lessons you teach her now.

Want to Know More?

If you’d like some personal help in setting up a savings or checking account for your child—or just want some friendly advice—give us a call at 484-223-4200 or come visit us. Got questions? We’ve got answers!

Cheryl Bartholomew

About Cheryl Bartholomew

Cheryl is the President & CEO at GOLD since 2009 and has over 36 years of banking experience. She ensures the happiness of all Members through positive experiences that exceed their expectations, regardless of whether it's a simple phone call, electronic transaction, or face-to-face interaction. She strives to provide a positive work environment for her employees so they continue to go above and beyond for Members. She works closely with Member Volunteers (Board of Directors and Supervisory Committee) and makes sure they feel appreciated for their contributions in setting up our Members for success. Cheryl believes that all Members can be empowered to take control of their financial well-being, and she's proud to say that we at GOLD are confident in helping them do that. 

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