Children learn everything from their parents. That’s why it's critical to start teaching your kids about finances from an early age. The good news is, it's never too soon to start teaching them all there is to know about money. If you want your kids to develop good money habits, start with these tips!
Looking for a Great Way to Teach Teens About Retirement Saving?
If your teen has earned income, they could be eligible to contribute to a Roth IRA set up by a parent. This is a great way to introduce the concept of retirement saving well in advance. Coastal Wealth Management (available through CFS)* is always here to help you learn more about setting up a Roth IRA.
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1. Set an Allowance
An allowance is your child’s first exposure to financial independence. Since they choose how they want to spend their allowance money, it's a good strategy to teach them that they can budget accordingly and save for things that they want. Give your children their allowance on a set day, at a set time so it's a routine for them.
2. Help Them Create Financial Goals
Sit down with your children and ask them what their goals are. It may be to buy a bike or a movie ticket. Teaching them the value of having a goal and saving for that goal shows your children that you can't just buy things without planning for them.
3. Encourage Them to Budget
Your children may run out of their allowance too soon and ask for more money. Use this opportunity to teach them the value of budgeting. Show them how they can be financially independent by planning and saving for their expenses. Instilling the value of a budget from an early age is the best thing you can do to ensure your children are on the track toward a successful financial future.
4. Open a Savings Account for Them
When your child is born, you can open a savings account for them. As they get older, you can encourage them to put any money they get, whether it's their allowance or a birthday gift, into the account. This will also give you the chance to teach them the importance of saving money.
5. Make Educational Shows Fun
If you're looking for more ways to educate your children on finances, Biz Kid$ is a fun and educational television show about financial literacy that your kids will enjoy. Biz Kid$, which is branded and funded by credit unions, is a great way to teach your kids important financial lessons at an early age. Pop some popcorn and make it a fun family activity to sit down and watch the show together!
6. Money Saving Education for Teens
As your kids reach their teenage years, it’s important to keep nurturing a sense of financial education. Here are a few things you can do.
- There are apps designed to teach teens basic money management skills. Most apps charge either a monthly or annual fee, so it’s best to shop around and check reviews.
- A quick review of your payroll can educate them in federal and state income tax deductions, as well as Social Security and Medicare taxes.
- Consider opening a Roth account. A teen with earned income could be eligible to contribute to a Roth IRA set up by a parent — a great way to introduce the concept of retirement saving. Because Roth contributions are made on an after-tax basis, they can be withdrawn at any time, for any reason.
For help setting up a Roth IRA, be sure you reach out to Coastal Wealth Management (available through CFS)*.