Every parent plays an essential role in teaching their kids good financial habits. And while conversations with an 8-year-old may differ from those with an 18-year-old, there are opportunities to teach kids and teenagers money management skills at every age.
Scott Kolodzinski, SVP, Consumer Banking Sales Manager, shares how he creates consistent opportunities for his kids to learn about financial management in their daily life. Through relatable examples, transparent conversations – and even a healthy amount of sibling-rivalry – Scott shares his personal approach to teaching kids about finances in a fun and engaging way.
As adults, many of us have made our own mistakes in terms of money. By starting early with our kids, we can help them avoid some of the mistakes we made and do our part to set them up for long-term success. They may not understand the value of these conversations now, but they'll thank you later.
It’s never too early to start
It’s never too early to begin teaching your children about money. As a parent, you can begin teaching children as young as five years old the basics about what money is and how it is used. Your child may already be learning about financial literacy concepts in school. Stay informed and reinforce these lessons at home.
1. Begin with the basics – spending and saving
We’ve created intentional ways to teach our children about two important financial concepts – spending and saving. Our kids have access to their own “accounts”, each used for a different purpose:
- Spending – In this category, we focus on teaching our kids how to spend money wisely and differentiate between needs and wants.
- Short-term savings – We classify short-term savings as money to be spent in a few months or one-two years from now.
- Long-term savings – These funds are set aside for their teenager years into adulthood, including their 529 plans for future college expenses.
2. Make saving fun
Encouraging our kids to save and contribute to certain purchases teaches responsibility, accountability and delayed gratification.
We start by asking our kids a few questions about what they’d like to save for and – most importantly – how they will plan for it. Here are a few conversation starters to consider.
| Questions for Your Child |
Questions for Your Teenager |
| What do you want to save money for? |
What is your goal? |
| What are your ideas to help earn and save money? |
What is your savings plan? |
| How long will it take to save for this item? |
How will you stay accountable to achieve your goal? |
Find out what motivates your child and help them plan for it. For my son, it’s video games. Many of the games require subscription-based payments, so he saves and budgets for the funds using his monthly allowance.
My daughter, on the other hand, loves to save for “fidget” toys to trade with her friends. Instead of Mom and Dad paying, she feels a sense of accomplishment in going to the store each month to purchase a new fidget with her own money.
We regularly help our kids track their savings via digital banking apps, monthly statements, and other fun visuals. Frequently monitoring progress motivates them to stay on track to achieve their goals.
As a family, we enjoy seeing movies together in the theater. We're currently planning a family movie day where each of our kids will plan and budget for a portion of the expenses. They feel a sense of pride in contributing to this special outing. It's all about empowering your kids to actively participate in the financial planning process.
3. Introduce opportunities to earn money
We’ve used simple household chores, like taking out the trash or feeding the dog, to teach our kids responsibility and the value of the dollar. Using a whiteboard and magnets as a visual incentive, our kids have fun checking chores off the list and anticipating a small payment at the end of the week.
As our kids get older, we will help them look for ways to earn money outside of the house. For example, is there a babysitting course they can attend, a neighbor’s lawn they can mow, or driveways to shovel?
We also talk to our kids about what Mom and Dad do at their jobs. Teaching our children about our career journeys may prompt them to start thinking about the types of jobs they may choose to provide for their own family someday.
4. Teach financial responsibility
While we’ve enabled our kids to earn their own money, it’s just as important to teach them money is a tool to use responsibly. We often talk to our kids about necessary expenses like electricity, groceries and other household items. Open conversations about monthly bills and payments can show them money is not always spent on “fun” things.
Sometimes we need to remind our kids that life isn't always fair. And that's certainly true in terms of finances. If we don't save or budget for the things we want, we may not get to buy that specific item this time around.
As your kids become teens
5. Save for college
Help your children prepare and save for upcoming college costs by researching financial aid and scholarship opportunities. Suggest speaking to their high school guidance counselor or reviewing websites like FinAid.org.
6. Establish credit
Establishing a credit history in a responsible manner can put your child in the best position possible when they are ready to buy a car or home. One way to establish credit is through a credit card. This will require a serious conversation with your teenager about what the credit card will (and will not) be used for.
7. Open a joint checking or savings account
Upon eligibility, consider opening a joint checking account or savings account with your teenager. As a parent, it’s up to you to determine the most appropriate timing for this milestone. For example, maybe it’s when your teen gets his or her driver’s license or first part-time job.
8. Meet with a financial advisor
At a young age, your child may have accompanied you to the bank to meet the bankers or count the coins from their piggy bank. As a teenager, encourage them to take ownership of their banking relationship and to speak with a Relationship Banker who can help them understand the accounts they will open and tools they can use to manage their finances.
9. View statements and monitor transactions
Review account statements with your teenager to help them understand the various transactions and watch their money grow.
10. Instill a value of giving
We’ve tried to instill a spirit of giving in our kids. They find joy in using their own money to buy gifts for family and friends during birthdays and other special occasions.
Beyond practicing generosity with family and friends, we demonstrate examples of giving back to our community. It’s so valuable to bring your kids along on your own philanthropic journey – whether it’s donating time or charitable contributions to a cause that is important to you and your family.
Start a conversation
Teaching your kids about financial management is an ongoing process that starts with modeling good behavior. With intentionality and a little bit of creativity, you can lay a solid foundation for your child’s financial future.
For more tips for you and your family, visit Your Financial Life or contact a Johnson Financial Group advisor.
