Celebrate Credit Union Youth Month: How to Teach Your Kids About Finances

As parents, we want our children to grow up to be successful, responsible adults. One of the most critical skills we can teach them is how to manage their finances effectively. Learning good financial habits at an early age is essential for setting a solid foundation for their future.

Many adults struggle with financial issues because they never learned the basics of money management when they were young. By teaching our kids about finances early on, we can help them avoid common pitfalls and set them up for long-term success.

In this blog post, we'll explore the tools, tips, and tricks you'll need to help teach your kids about finances, including FCU FAM, a tool we created especially to share valuable money lessons. From starting with the basics to providing age-appropriate lessons and leading by example, we'll cover everything you need to know to raise financially savvy kids.

So, let's dive in and explore how you can set your children up for a bright financial future!

Start with Money Basics

Before diving into more complex financial concepts, starting with the fundamentals is essential. Here are three key areas to focus on when introducing your kids to the world of money:

Introduce the concept of money and its value

Begin by explaining what money is and how it is used. Help your children understand that money is earned through work and can be exchanged for goods and services. You can use everyday examples, like going to the store or buying groceries, to illustrate how money is used in the real world.

Teach the difference between wants and needs

One of the most important lessons kids can learn is the difference between wants and needs. Explain that needs are essential items, such as food, shelter, and clothing, while wants are things that are nice to have but not necessary for survival. Encourage your children to prioritize their needs before considering their wants when making purchasing decisions.

Encourage delayed gratification

Teaching your kids to wait for what they want can be challenging in a world of instant gratification. However, delayed gratification is a crucial skill that can help them make better financial decisions in the future. Encourage your children to save up for items they want rather than expecting immediate purchases. This will help them understand the value of money and the importance of planning and saving.

Help them open a youth savings account

Once your child has a grasp on the basics of money, it’s time to introduce them to the world of banking. Help them open a youth savings account, which will give them hands-on experience with managing their own money. With FCU, kids can open their first savings account with just $5 and build their savings up from there by depositing their birthday cash, allowance or earnings for chores well done. They’ll be able to access their account online to check their balance (with easy access for parents too!) and can even open set up savings goals to work towards. As a parent, you can also use FCU FAM, part of your FCU Anywhere mobile banking, to transfer money into your kids’ accounts and reward them for good grades or other accomplishments. 

As kids get a little older, FCU can also help you introduce teens to checking accounts and debit cards through financial literacy tools and opening their first accounts. With this kind of account, they’ll learn how a debit card is linked directly to their checking account and they can only spend what they have available. This is also the time to teach them how to budget their money, use an ATM, and keep track of their transactions. Emphasize the importance of keeping their debit card and PIN secure and reporting any lost or stolen cards immediately.

By focusing on these three basic concepts, you'll lay the groundwork for more advanced financial lessons as your children grow older. Remember to keep the explanations simple and relatable, using examples that your kids can easily understand.

Lead by Example

One of the most effective ways to teach your kids about finances is by modeling good financial behavior yourself. Children often learn by observing and imitating their parents, so it's crucial to demonstrate healthy financial habits in your own life.

Demonstrate good financial habits in your own life

Living within your means and avoiding excessive debt is a crucial aspect of demonstrating good financial habits. Create and stick to a budget to show your kids the importance of managing money responsibly. Make a habit of saving regularly for both short-term and long-term goals, such as emergency funds, vacations, or retirement. When making purchasing decisions, take the time to compare prices and make informed choices, prioritizing needs over wants.

Involve kids in household budgeting and financial decisions

Include your children in age-appropriate financial discussions to help them understand how money works in a household context. Show them how you create and manage your household budget, explaining the various categories and how you allocate funds. Allow them to help with grocery shopping and compare prices to teach them about value and frugality. When planning family vacations or making large purchases, discuss the associated costs and how you plan to save or pay for them.

Be open about discussing money and financial topics

Encourage open and honest conversations about money to foster a healthy financial mindset in your children. Share your own financial successes and challenges, discussing how you overcame obstacles or made smart decisions. Highlight the importance of giving back and donating to charity, explaining how this fits into your overall financial plan. When your kids have questions about money, answer them honestly and transparently, providing age-appropriate explanations and examples.
By leading by example and creating an open dialogue about finances, you can help your children develop a strong foundation for their own financial future.

Use Resources and Tools

Numerous resources and tools are available to help you teach your kids about finances. Incorporating these into your lessons can reinforce key concepts and make learning more engaging.

Youth accounts and programs offered by Florida Credit Union

 
Florida Credit Union offers a range of youth accounts and programs designed to help kids manage their money effectively. Opening youth savings and checking accounts can provide hands-on experience with real-world money management. As members, you and your kids will also have access to FCU FAM, a handy tool that lets parents quickly and conveniently transfer money into youth accounts, whether it's for a weekly allowance or a reward for straight As. Plus, 'parent loans' allow kids to manage more significant purchases while teaching them to repay money borrowed on time and with interest. 

Registering for FCU FAM is seamless with our FCU Anywhere app and takes just a few minutes to set up:
 

Books and online resources for teaching financial literacy

Reading age-appropriate books about money, saving, and investing can help your children grasp financial concepts in a fun and relatable way. Utilize online resources like educational websites, videos, and worksheets to supplement your lessons and provide interactive learning experiences. Explore financial literacy programs offered by schools or community organizations to further enhance your children's understanding of money management.

Apps and games that promote financial education

Incorporating budgeting and savings apps designed for kids and teens can make financial education more interactive and engaging. These apps often use gamification to teach valuable money management skills in a way that resonates with younger generations. Playing board games or online games that focus on financial concepts can also be an enjoyable way to reinforce lessons. For older kids, you could encourage the use of virtual stock market simulations to introduce them to the world of investing and help them understand how markets work.

It's Never Too Early to Start

Teaching your kids about finances is one of the most valuable lessons you can impart as a parent. By providing them with the tools, knowledge, and skills to manage money effectively, you're setting them up for a lifetime of financial success. It's never too early to start, as the financial habits and mindsets your children develop now will stay with them for the rest of their lives.

Remember, teaching your kids about money is an ongoing process. As your children grow and face new financial challenges and opportunities, continue to have open and honest conversations about money, guiding them with your own experiences and wisdom. By prioritizing financial education in your family, you're giving your children an invaluable gift that will benefit them in countless ways throughout their lives. Start today, and watch as your children grow into financially savvy adults, ready to take on the world with confidence and success.