Many parents know they should talk to their children about money, but they may not know how. They may find themselves asking questions about what kids need to understand, and how they can make learning about dollars and cents fun and engaging.
A 2014 T. Rowe Price Parents, Kids & Money survey found that 69 percent of parents say they want to set a good example for their children when it comes to finances. However, 74 percent were hesitant about talking to their kids about finance-related topics.
So, family and relationships reporter Natalie Feulner went to the parents and bankers at Bangor Savings Bank for their tips about talking to children about debt, savings and spending. These answers contain insight from multiple people at Bangor Savings and have been edited for style and space.
Q: Why is it important to talk with kids about finances?
We all want children to grow up to be fiscally responsible adults and the lessons they learn at a very young age will help mold their futures. Children will take a greater interest in saving money if the approach is fun and engaging.
Q: When should you start talking about money with your children?
As soon as children can count, add and subtract, they can begin understanding the concept of money. Teaching them that their parents work for their money will be helpful in shaping their learning. After all, money doesn’t just come from an ATM. It’s important to work on your child’s financial awareness early on, before they become teenagers and the spending begins.
Q: What do kids need to know about savings?
That the safest place to keep their money is in a bank. Regular trips to a branch to make deposits can be fun for children. Some banks have hot chocolate in their lobbies and coin counting machines which can help make a trip to the bank more of an event for kids.
Q: How can parents teach children about responsible spending?
Teaching through the use of allowances is very effective. One great idea is to give children three jars – one for charitable giving, one for saving and one for spending. This will help a parent teach his or her children to make their own decisions about how they divide their allowance, how they should set goals for saving and which nonprofit organization deserves their charitable gifts. This also helps them learn to prioritize and budget for that special toy or set their aspirations high by saving for college.
Q: What are some resources parents can use to help their kids budget, save and learn about money?
One Maine nonprofit, Build A Biz, helps children as young as 5-years-old learn life lessons through virtual mini-entrepreneurship. The online interactive program teaches children about setting up a business. Lessons include information about the importance of setting goals, budgeting, marketing and advertising. To learn more or to help your child get started creating his or her dream business, check out the Build A Biz website at http://www.buildabiz.me/
Additional resources worth checking out:
Money As You Grow: Moneyasyougrow.org is a project of the President’s Advisory Council on Financial Capability. It is a free online interactive tool that offers 20 financial lessons and activities specific to certain age groups and comprehension levels. According to the website, the activities are designed to “inspire families, community organizations, nonprofits and businesses” to promote financial literacy.
Junior’s Clubhouse: This interactive game is a product of Dave Ramsey, the financial guru who created “Financial Peace University” aimed at helping adults become debt free. At Junior’s Clubhouse, kids meet Junior, an 8-year-old who is excited to teach them through games and videos “how to save money and still be able to spend some, and how to give.” In his words, “Money is something that’s really cool if you know the right thing to do with it.” Check it out at http://kids.daveramsey.com/.
Money Savvy Generation: This company offers parents child-focused products designed to teach personal finance basics. Parents and teachers can purchase financial literacy materials or check out some of the free information including insight on creating allowance contracts that set expectations for how money is managed. Visit msgen.com for more information.
BizKid$: This site has videos, blogs and interactive features for the tweens and teens in your life to learn about money and starting a business. It includes 65 episodes that focus on showing kids how to make and manage money as well as introducing the basics of financial literacy. Messages are either sketch comedies, animation or documentary-style stories about real-life entrepreneurs. The website, bizkids.com also includes lesson plans, activities and a monthly electronic newsletter.
