Take time to teach your kids about money - KWWL - Eastern Iowa Breaking News, Weather, Closings

Take time to teach your kids about money

Financial Tip of the Week from the Iowa Bankers Association:

As consumers, we face more financial decisions and responsibility than ever before. As a result, parents have an important responsibility to help educate their children about basic financial principles. While many children are on a break from school over the holidays, parents may consider devoting time to teach their kids about the value of money and the importance of saving. Here are five tips for parents to consider as they take steps to develop financially-savvy kids:

  1. Help your child understand the concept of money. Start by introducing young children to basic financial concepts like where money comes from and how it is used. Then introduce the different types of coins, and practice identifying pennies, nickels, dimes and quarters. Older children may be ready to practice other basic skills like counting money and making change. Make learning fun by using play money or by playing educational money games. 
  2. Teach the value of saving versus spending. One of the best ways for children to learn the concept of saving is by having money of their own. Consider paying an allowance in small denominations (such as $1 bills) to help teach your child to save. Encourage your child to save $1 or more each week. You can help your child's savings grow even faster by matching all or a portion of the amount they choose to save. 
  3. Open a savings account for your child. Teach your child how to grow their money by investing it in a savings account at a local bank. Your local banker can provide you with all of the information you need to know about opening an account for your child. Some banks offer savings programs for kids that provide fun incentives to save money. Take your child on a field trip to your local bank to explore the options available. 
  4. Review basic financial terms. Here are a few simple terms you may want to explain to your child:
    • Saving – keeping your money for a future goal instead of spending it.
    • Bank – a business that keeps money for customers, makes loans and provides other money-related services.
    • Bank account – a safe place to keep your money.
    • Deposit – adding money to your bank account.
    • Withdrawal – taking money out of your bank account.
    • Balance – the total amount of money you have in your bank account.
    • Interest – the money a bank pays depositors for using their money. Interest can also be the money a person pays when borrowing money.
  5. Explain the difference between "needs" and "wants." Help your child learn how to make good spending decisions in the future by taking time to identify "needs" and "wants" with your child. Discuss how a need is something you must have in order to live, while a want is something you would like to have.

These financial tips provided by the Iowa Bankers Association (www.iowabankers.com) in partnership with the American Bankers Association Education Foundation (www.abaef.org).

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