Raising Financially Responsible Children

Most parents understand that they need to teach their children how to deal with money at some point in their life. Knowing exactly when can be challenging and confusing. Thankfully, the Consumer Financial Protection Bureau (CFPB) released a guide to help families raise money-smart kids. Here are a few important takeaways from the guide that you should consider implementing in your child’s life. 

Ages 3-5: Introduce basic savings and spending concepts

 As many of us know, children around this age want everything in sight. They don’t quite grasp the concept that money isn’t an infinite resource for many. According to the guide, parents should introduce the concept of saving and spending. A great way to illustrate this to your child is to give a limited number of coins and talk to them about using them to purchase things or saving them to purchase something more significant in the future. Initially, your child might choose instant gratification over saving for something bigger, but the more you do this exercise the more willing they will be to save. 

Ages 6-12: Set savings goals

 When kids enter this range, it’s important that they start to grasp the concept of planning. Savings goals during this period are important and will help with the rest of their financial development down the line.An exercise that you can do with your kid is to have them write down what they would like in the short, mid, and long-term. This is a great way for them to layout their financial future and then associate a price for each goal. To take it even further, you can attach a budget to show how much they would have to save monthly to reach each of those goals. 

Ages 13-21: Boost financial confidence

 Building confidence is so important for teens and young adults. As a parent or a guardian, you can empower your child by ensuring they follow through with their financial plans. If they tell you a goal, continuously check-in and see how they are doing. If you notice them slipping, offer some guidance to get them back on track. The CFPB says that children this age are able to identify trusted sources of financial information. Having the knowledge and confidence to say “No” to financial scams is a valuable skill. For more information, visit https://www.balancepro.org/resources/newsletters/how-to-make-your-child-financially-capable-may-2018/