Cementing healthy habits in kids from an early age is important to their development. Finances are no exception. By getting kids involved in family finances, it helps them understand saving, budgeting, and smart spending. This knowledge helps them become more financially independent as they grow, empowering them to manage their money more effectively as adults, and reducing financial stress. Here are some ways to incorporate financial education with your little ones.
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Have the Talk
When you are getting kids involved in finances, it’s important that they understand what they’re learning. Start the journey by sitting down and having a talk about why learning about money is important. Use personal experiences that relate to them, like how you budgeted for the last family vacation, to help them understand cutting out little wants for something bigger.
Make a Budget
Show them the family budget, explaining that you list all amounts for income, expenses, and debt, and then do math to see how much money you have left. Then, help them create their own mini budget on which they can actively work. If they don’t earn an allowance, that’s ok! You can easily create a budget with things like candy or toys.
How to do it? They start out with a certain number of candies in the week. As they do good things like chores and earning good grades, they can earn more candy (income). If they miss chores, have a repercussion for something, or choose to trade in that candy for something else like extra TV time, they lose (expense). You can also set a weekly debt where they pay a certain amount to contribute to the household. Meet once a week to review and update the budget, focusing on the things they did well to solidify the good habits.
Take them Shopping
Once they have an understanding about budgets, take them on your weekly grocery trips. Have them help make the grocery list for planned weekly meals and snacks. Explain to them the difference between buying name brand vs store brand, how using coupons can help save money, and how important it is to stick to the grocery list, so you don’t go over budget. Explain that going over budget on groceries means there is less money for another item or bill, which hurts the overall budget.
Celebrate the Savings
Rewarding good behavior is the best way to positively reinforce those actions. When you do your weekly budget review, talk to them about what they did well. Congratulate them on passing up on something they would normally have bought or asked for and explain how that positively impacted their budget. Then, give them the opportunity to spend and save what they have left at the end of the week. Whether they’re playing with an allowance or candy, have them put their savings into a clear jar or bank so they can see it grow week to week.
Open a Savings Account
Another great way to get kids involved in finances is by having them open their own savings account. Teach them to balance a register, document deposits and withdrawals, and help them do the math to get their ending balance. Many financial institutions offer rewards for youth savings so in addition to seeing their money grow, they can get fun goodies with every deposit. As they age up, that account can grow to add a checking and debit card where they can further learn financial education and smart spending habits.
By introducing kids to the basics of financial literacy early on, you’re setting them up for long-term success. Engaging them with practical exercises, like budgeting, shopping, and saving, teaches valuable lessons that will shape their understanding of money throughout their lives. When children are empowered to make informed decisions about spending, saving, and even investing, they develop skills that lead to financial independence and stability. This foundational knowledge not only helps reduce the stress that often accompanies adult financial responsibilities, but it also encourages a proactive approach to managing money, ensuring that your child is equipped for a secure and successful financial future.
Author: Rachel Caballero is Community Development & PR Manager for TruWest Credit Union. TruWest® Credit Union is headquartered in Tempe, Ariz. and operates as a cooperative providing its members with a lifetime of quality financial services and a culture of caring for its organization, employees and communities. TruWest is a strong and sound financial institution with more than 90,000 members and assets totaling more than $1.8 billion. TruWestCredit Union has 11 financial service centers —eight in metro Phoenix and three in Austin, Texas. For more information, visit https://truwest.org/.
