Tag Archives: Financial Literacy for Children and Teens

4 Fun Ways to Teach Your Kids About Money

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Have you ever wished that someone taught you more about money as a child? The sad reality is that many students graduate from college with a degree but are unable to manage their money. Here are some tips to educate your children about money so they can better handle their finances in the future:

1. Talk isn’t cheap when it comes to money.

Dianne Caliman, creative director of The Centsables, an award-winning animated TV series on the Fox Business network, believes talking is key when it comes to money matters with children. She suggests including your children in the family’s money management activities such as looking through circulars and clipping coupons.

She points out that these types of activities are great jumping off points for discussions. Caliman explains that showing real life examples to children fosters understanding and meaningful connections to money management. “Show the kids your bills, and explain how purchases made earlier must be paid for now,” she says.

Caliman also reminds parents to be role models and to ask themselves the following: What messages do you send your children? Are you living beyond your means? Do you pull out the plastic for every purchase? Do you and your spouse worry or argue about money? She advises taking a look at your own money habits, and make any changes where you think necessary. “When you exercise good financial judgment, you are automatically teaching your children by example. That’s a win-win situation for all,” she adds.

2. Make a budget-based allowance.

Bill Dwight, founder of FamZoo.com, suggests giving children an allowance that is based on a very simple budget. “Make a list of the typical things you would expect your kids to buy for themselves over a period of time, plus how much you would expect them to save and give, and calculate an allowance amount to match those clear expectations,” he says. Dwight adds that as your kids mature, you can extend the budget to cover more areas of spending like clothing. This approach helps insure that an allowance is a personal finance teaching tool rather than an entitlement.

3. Practice paying back loans before college.

One way to get practice at paying back a loan is to lend your kids money. Dwight suggests teaching your kids how to manage loan payments by arranging a parent-financed loan for a big ticket item like a laptop or a smartphone. “Direct a portion of their allowance, chore or job payments to paying off the loan each period. By making regular payments over an extended period of time, not only will your kids appreciate the cost of expensive items more, but they’ll take better care of them.”

4. Take on the tough lessons, too.

No one said teaching kids about money was easy. It may take work to get kids on board with the idea. Rod Griffin, director of public education for Experian knows this firsthand by getting a little pushback from his own granddaughter when it came to the topic. In her elementary school class, she has to “pay” for her school books and “rent” the desk she sits in with pretend money she earns through various activities, academic performance and good behavior. What she saves after expenses can be used to “buy” rewards.

Griffin points out that many parents feel ill-equipped to teach their kids money concepts, especially more advanced ones and don’t know what to do. He explains how there are many sources on the web that can help. Griffin recommends checking out Moonjar.com for younger children, because it explains the basics of saving, spending and giving. LifeSmarts.org is geared toward older kids and provides free lessons online via videos and other tools.

Griffin also suggests showing high school and college-aged kids an actual credit report. A sample one is provided on the Experian website to understand the different parts and what they mean. They can see how their financial decisions impact how prospective creditors view their credit history. They get to see how their financial behavior, such as paying bills on time or being late, is tracked and recorded much like a permanent record.

At some point, everyone has to manage their own finances. The more exposure and practice a child gets, the better equipped they will be in the future when they have to make financial decisions on their own. Consider teaching them age-appropriate lessons as they grow to help them develop the skills they need to successfully handle their money.

Here at First Financial, we have a few products and services just for kids so they can start saving for their future while having fun doing it!

  • First Step Kids Savings Account: First Financial’s unique First Step Kids Savings Account is specifically designed for young people, with a focus on education and fun.*
  • Dollars for A’s Program: For every “A” your child earns on their report card, First Financial will deposit $1 into your child’s First Step Kids Account!* It’s a great way to reward your child for doing his or her best in school. It also teaches the life long practice of saving for the future. To earn your dollars, visit a branch location.**
  • Summer Reading Contest: Every summer we have a reading contest where First Financial kids up to age 18 can earn rewards for the books they read, along with a great grand prize!***
  • Student Checking Account: A complete Checking Account for students ages 14-23. It comes equipped with an instant issued Debit Card, has no minimum balance requirements, and more!****

*As of 12/12/2012, the First Step Kids Account has an annual percentage yield of 0.05% on balances of $100.00 and more. The dividend rate may change after the account is opened. Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location.  Parent or guardian will be a joint owner and must also bring their identification. A First Financial Membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

**Offer applies only to report cards for most recent school terms. Letter grade “A” or 90%+. No back rewards available for prior semesters or marking periods. Available for First Financial members between 1st and 12th grades. Qualifying report cards must be submitted within 45 days from the date of issue. Child must be present and a $5.00 deposit to a First Step Kids Account is required to receive the Dollars for A’s incentive.  Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location.  Parent or guardian will be a joint owner and must also bring their identification. A First Financial Membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

***Credit Union membership and Savings Account is required to participate. Members up to age 18 are eligible to participate and must complete an entry form. Reader rewards must be deposited to a child’s First Financial Savings Account. Winning reader and 4 runners up will be drawn after the contest ends (September), and will be contacted by the First Financial Marketing Department. Forms will not be posted on the website before the contest entry period begins.

****A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. Accounts for children age 13 and under are excluded from this program.

*Original article courtesy by Karen Cordaway of US News.

3 Effective Uses of an Allowance

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allowanceFor many families, using an allowance to encourage children to do chores is an effective means of both teaching responsibility and money management. For other families, linking chores to an allowance means that the children only learn to help out around the house in exchange for payment. It is important for parents to sit down and talk about what they hope their children learn from the experience of getting an allowance. Here are three common methods you may wish to consider implementing:

The “You’re Part of the Family” Strategy

This strategy hinges on a few things: adult family members must always set a good example when it comes to their own chores, and the chores given to a child must bring them closer to the whole family. Family work days are effective ways of making this strategy work. The downfall of this strategy is that it can often be harder to track what, when and how well a child completes their given tasks.

The “Must Work for Your Pay” Technique

This technique links each separate job with an amount of pay. The benefit of this style is that it can make keeping track of completed tasks much easier. To make this work, very clear expectations must be set both with a timetable and in regards to how to correctly carry out each task. The downside is that since the children link a task to a certain amount of money, they may decide the amount is not worth the work required to complete the task. This can cause friction and frustration with parents and children.

The “Request as Needed” Method

This method involves you allowing your child to make requests to you for the things they want, which can allow you to help your child verbalize why what he or she wants, is important to them. It also builds their ability to negotiate and be persuasive. The downside of this method, however, is that you will constantly be having your child ask for and negotiate for what he or she wants.

Whatever method you use, there are some universal tips for every allowance strategy:

  • Help your child learn to give and save by encouraging them to put 1/3 in a savings jar, 1/3 in a giving jar where they choose where that money will go every so often, and 1/3 in a spending jar that they can use whenever they want.
  • Begin early. Most experts suggest beginning to help children work with their own money around the time they enter Kindergarten.
  • You will need to clearly define that allowance money goes to what your child wants and not what they need.
  • Raises should be given at birthdays and can also be linked to an increase in responsibilities.
  • Keep good track of responsibilities completed so that confusion and arguments do not occur over the job being completed.
  • As a child grows, it is OK to give extra money for larger jobs completed, like bigger seasonal work around the house.

Learning to work with money is an important childhood milestone. Giving an allowance can be a positive event that brings the family together instead of creating arguments.

ATTENTION PARENTS: Please bring your children in to take full advantage of our First Step Kid’s Savings Account* – a unique product that was specifically designed for young people, with a focus on education and fun and it’s a great way to encourage your kids to save every penny! We also offer our Dollar’s for A’s Program** and our annual Summer Reading Contest which additional ways your children can earn money while having fun doing it – for more information, visit our website.

This article written by our friend, Marcia Hall of GoNannies.com.

*As of 12/12/2012, the First Step Kids Account has an annual percentage yield of 0.05% on balances of $100.00 and more.  The dividend rate may change after the account is opened. **Offer applies only to report cards for most recent school terms. Letter grade “A” or 90%+. No back rewards available for prior semesters or marking periods. Available for First Financial members between 1st and 12th grades. Qualifying report cards must be submitted within 45 days from the date of issue. Child must be present and a $5.00 deposit to a First Step Kids Account is required to receive the Dollars for A’s incentive. Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location. Parent or guardian will be a joint owner and must also bring their identification. A First Financial Membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.