Vantage Point

Five Tips for Teaching Your Kids about Money

1. Teach them sooner rather than later

Studies have shown that habits are easier to create earlier in life; in fact, some studies show that general routines and attitudes are solidified in children as young as 9-years-old. In terms of finances and money habits, that means it’s really never “too soon” to teach your child about money.

Start slow. Begin with a savings account, and make sure that deposits are “experiential moments” that create a unique memory. Let your child actually hand the money to the teller or physically deposit the money into the PTM—the earlier they engage in handling money responsibly the better.

Choose the Right Account. Early on, it’s important to show your child the value of saving their money and planning for the future, even if it’s only for next week’s ice cream truck visit. Seek an account that doesn’t have monthly fees but provides interest, as you want to show your child tangible benefits of keeping their money in the account. Vantage savings accounts are well-suited to meet this need—and our Secret Savers Club can help make saving fun for children age 10 and under.

When your child becomes a teenager, opening a checking account can help them learn to manage their money when they have full access. Let them build positive habits for debit card usage and introduce them to online banking to keep track of their expenses.

2. Help them practice saving and spending

Practice makes perfect. Sure, it’s a cliché, but it’s 100% true when it comes to teaching children about money. The more they save and spend responsibly, the more likely they are to make financial responsibility an ingrained habit.

What could that look like? Encourage your child to save for “big purchases.” Help them create a goal, such as saving for a new toy or video game—something which requires them to intentionally save for the purchase. As they wait, encourage them to stay focused on their goal and guide them toward eventually making the purchase for themselves. That experience of waiting and watching the savings build, purchasing the item, and then enjoying it could lead to a lifetime of wise spending choices.

3. Give them the tools (and apps!) they need

Two important aspects of personal finance are tracking expenditures and managing a budget. There are many tools in terms of applications and programs which can provide the framework needed to teach budgeting, but even a basic spreadsheet and calculator will do.

One practical recommendation in terms of budgeting is to encourage your child to use Vantage online banking and mobile app. The closer they can follow the accounting, the more likely they are to understand the value of saving and financial planning. Within online banking they’ll also find helpful widgets—such as our Track Spending widget. This widget allows them to assign categories to purchases, and they can take it a step further and assign tags as well.

In addition to tracking each dollar in and out of their account, Vantage offers resources which encourage children to identify and understand trends in their spending. This teaches them to create and maintain a balanced budget; it also allows kids to plan and make decisions based upon a concrete understanding of their finances.

4. Teach them that credit cards are not “free money”

According to our Vantage Community Education Specialist, Marina Gakhutishvilli, one of the challenges that she has encountered when visiting classrooms and schools is communicating to children that credit cards are not “free money”.

The delayed payment of a credit card can lead to a disconnect between the cost of an item and the amount spent. To help with this, Gakhutishvilli encourages a two-stage process for teaching children about credit card usage. She recommends having the child use a debit card where they can develop a “buy now, pay now” understanding of card usage. Once the child firmly grasps this, then she says they can move on to the harder concept of credit cards “buy now, pay later”.

According to Gakhutishvilli, the goal is to get the child to the point where they always “think before they swipe”.

5. Model finances and include them in the discussion

Exposure and modeling are the two most important considerations for parents to remember when teaching their children about finances. Children may not learn responsible money management skills if they’re not exposed to real conversations about money, spending, and savings. Gakhutishvilli suggests that parents include their children in the conversations about the family budget or create a family goal like saving for a vacation or gift—it’s an important way to expose them to real life demands and expenses.

Whether parents include their children in financial conversations or not, children are always watching. As Gakhutishvilli reminds us, “Children watch how their parents spend and follow in their footsteps.” Since children unconsciously learn from their parents’ modeling, it’s important to be intentional about exposing your child to real world finances at an early age and, of course, to model sound practices for them to emulate.

If you’re looking for help in teaching your children about money, here are a few Vantage resources:

  • Secret Savers Club — A Savings club designed specifically for children age 10 and under
  • Money Matters — Our educational program with different presentations for teachers, parents, and students
  • Save.Think.Live. Checking — An account specifically designed for people under the age of 26