7 Tips For Raising Money-Smart Kids


Carrie S. Niesman, Vice President/Regional Manager

As parents, we work hard to protect our kids. Even before they cross their first street, we start teaching them how to assess and address the risks that come with daily living.

When it comes to money, this can be a bigger challenge. It takes patience, discipline and repetition to become financially savvy. But, the earlier you start teaching them, the more likely it is they’ll be ready to make money-smart decisions by the time they receive their first paycheck.

Here are some tips for where and how to begin:

1. Lead by example. Even as they are seated in the cart at the grocery store, let them see you take your time to comparison shop and check for coupons before you choose a product. Ask for their help conducting online searches when making larger purchases. Help them understand that it isn’t as much about the amount of money you spend—even if you can afford it—as it is the value you receive for what you get.
2. Encourage them to start saving when they’re young. By kindergarten, kids are able to understand that it takes time to get what you want. Piggybanks are good learning tools for reinforcing this.
3. Stress the difference between wants and needs. Both understanding the difference and training yourself to only buy what you can afford once a “need” is established are keys to leading a prosperous life.
4. Let them see how saving works. The jar concept helps make the difference between short-term savings and long-term savings concrete and visible. Kids can see where their money goes and watch it accumulate. They may use one jar to save for a specific goal, like a video game that will be coming out in a few months. Then, they may have a jar for long-term savings, like the car they said they want to be able to buy when they turn 16 or their college education, a goal you want them to aspire to. Some parents have another jar for giving to reinforce a family’s belief that it’s important to think of and share with others. In my own family, we’ve used jars to save for family outings, which helped my kids understand how much it costs to have fun at a carnival!
5. Insist they pay themselves first. As children start to receive allowances and learn that doing extra chores—at home and for neighbors—can lead to extra cash, teach them the concept of paying themselves first. Encourage them to add some portion of their earnings to savings before spending the rest.
6. Bring them to the bank. Today, most adults rely on electronic banking and ATMs to handle their personal finances. However, it can help children understand where the money goes when it gets deposited and to see how it is withdrawn by literally taking them to the bank. Once they get the mechanics of how money flows into and out of their accounts, making the switch to electronic transfers and the use of debit cards can be much easier and less likely to result in overdraft charges or unnecessary fees.
7. Exercise care when using credit cards around children. To a child, paying with a credit card resembles waving a magic wand to get whatever you want, when you want it. If you aren’t using cash in their presence, try to let your children catch you doing your monthly bills to help them understand that the money to pay for those charged purchases is quite real and comes out of your account.

Where We Can Help
Moving money from jars and into savings account deposits also reinforces the notion of how savings builds over time. Similarly, letting kids review their statements and encouraging them to use calculators, like those offered on our website, can also help them understand what saving—and investing—looks like and where it leads over time.

Being a community bank, we are always available to meet with you and your children to answer any questions they may have and talk to them about the best way to meet their financial goals. Together, we can achieve a money-smart future.

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