Taking the time to ensure your children are financially literate early on can have a big impact later in their lives. Since only 17 states require high school students to take a personal finance class, kids will pick up many of their financial responsibility cues from you. No matter what stage your children are at, it's never too late to start important conversations and help them develop good money habits.
Even at a young age, you can use everyday opportunities to start helping your kids internalize the value of money. For instance, the next time you're at a store and your child begs for an item, use it as an opportunity to help them start saving for it. Let them pick out a container to use as their "piggy bank" — a clear jar, for example, can help kids visually see the progress they're making toward their savings goal.
Talk to your kids about different ways they can earn funds so they can add to their piggy bank, whether through chores around the house, helping neighbors with small tasks or a portion of monetary gifts from special occasions such as birthdays. Help them keep a simple "ledger" — like a fun chart on the refrigerator where they can track their progress — and once they've achieved their savings goal, bring them to the store to purchase the item themselves.
The middle school years are a good time to teach kids about the impact of money, including budgeting and future expenses. If your middle schooler doesn't already have a savings account, bring them to the bank and help them open one. Consider making a rule that all funds they receive will be split down the middle — half they can keep for personal spending, with the other half going into their savings account.
Try a savings exercise with your pre-teens. Have them write a list of items or experiences they want in the near future — a cell phone, video game console, etc. Ask them to prioritize each item from most wanted to least, then have them look up the prices for everything. Encourage them to pick a goal end-date for their top priority picks. For instance, if they want tickets to a concert, help them create a timeline of how much they would have to earn per week before tickets go on sale, then brainstorm ways they could earn the money.
By age 15 or 16, your teenager may start working a part-time job. Consider helping them open a teen checking account if your bank offers that option. This gives them the opportunity to sign up for direct deposit for paychecks, while allowing parental oversight since the account will most likely be tied to your own. If your child is considering college or other higher learning paths, encourage them to split their earnings into three categories: majority of their funds going to savings, some for current necessities such as gas or auto insurance, and the rest for personal spending.
High school is also a good time to start helping kids to build a credit history and to teach them the importance of paying off credit card bills in full each month. Before your child turns 18, you can usually add them as an authorized user or joint account holder on one of your own cards. If you're concerned about having that tie to a credit card that often carries a high balance, there are cards specially designed for teens that have low credit limits, typically below $1,000.
If you're looking for help to get started teaching your children financial responsibility, take advantage of free but in-depth resources, such as the financial literacy curriculum from the Federal Deposit Insurance Corporation (FDIC).
