Posted on 4/10/2012
April is National Financial Literacy Month, and your bankers are encouraging parents to take this opportunity to teach your children the importance of financial responsibility.
By making financial education a family priority, children can learn the importance of budgeting, saving, investing and using credit wisely. The path to financial success begins at home, and children learn best by watching the example their parents set.
The following tips are simple ways that parents can provide the foundation necessary for their children to make sound financial decisions for the rest of their lives.
1. Teach children to save starting from a young age. Encourage young children to save their birthday money from grandma, coins they find on the car floor and other money in a piggy bank or a shoe box. Have them count the money at the end of each month to see how their savings grow.
2. Open a savings account for your children. Once your child is older and receives an allowance in addition to potentially earning money for doing household chores or babysitting, take him or her to your bank to open a savings account. Teach your child to set aside a portion of the money they earn every month to deposit into this account.
3. Have your children help manage household monthly bills. Teach your children about paying monthly bills and balancing a checkbook by having them assist with simple finance tasks. For example they open the monthly phone, electric or cable bill and assist with balancing the family checkbook after these bills are paid. Teach them how to budget by using your family expenses as an example.
4. Look for children’s financial literacy programs in your community. Financial literacy programs are often sponsored by local banks, and April is an ideal time to be on the lookout. Also many schools are adding financial literacy components to their programming. If financial literacy is not being offered in your child’s school, ask the principal if it could be added.
5. Open a checking account for your children. High school students often hold part-time jobs, providing a stream of income that can go into both savings and checking accounts. Now is also a good time to discuss the importance recording every deposit and withdrawal to avoid overdraft fees and other unnecessary charges that can come with a checking account. Help high school students set long-term goals by designating how much money to put into savings, with the remaindering going into their checking accounts.
6. Teach your older children how to create and stick to a budget. Once your children are close to going off to college, they must learn how to budget, as they will soon be doing so on their own. Sit down and work together to create a realistic budget, including expenses such as renter’s insurance and other less obvious expenditures. Emphasize the importance of living on less than one’s income and of avoiding debt. Discuss how to responsibly use credit, look for low interest rates, and avoid late fees and interest payments.
This information is provided with the understanding that the Association is not engaged in rendering specific legal, accounting or other professional services. If specific expert assistance is required, the services of a professional should be sought. Provided as a public service by the Indiana Bankers Association.