As parents we want the best for our kids. As their first teachers, it is our obligation to teach them good morals, values, and strategies to navigate life. Pretty major, right! One of these lessons is making sure they better understand money, including how to save, how to spend, and how to give. And even though we have good intentions, we may not know the best way to get the dialogue started. So how can you help them achieve this goal of saving wisely and taking fiscal responsibility? Read on to check out some of my go-to tips about teaching kids about money, plus the insider scoop about my favorite debt card for kids.
1. Give your child responsibility with Greenlight.
Your child probably sees you swiping away, not realizing that your plastic card is connected to actual money. Enter Greenlight, a debit card for children that you can control. Using flexible parental controls, you can restrict card usage and give your child the “greenlight” and pick the exact stores where they can spend money right from your phone! The Greenlight debit card is safer than cash and even comes with your child’s name on it, so if they lose it (cause, ya know, life!), it will much easier to find then if the lose your cash. Plus, the second you realize the card is missing, you can shut the card off from the app on your phone. How cool is that?!
The best part is that real-time notifications tell you where and when your child has spent money. This type of reporting allows you to review spending choices with your child that you can use a teaching moment. Another cool feature is that the app allows you to allocate allowances and give funds to your child anywhere. Check out even more about how the Greenlight app works here!
2. Save a little each day.
Remember the old saying, “Put money away for a rainy day”? Here is a fun way I learned to save money that you can do with your children. If you put away $1 on the first week, $2 on the second week, $3 on the third, etc until you put away $52 on the last week, you will save $1,378 a year! And if you double what you put in each week, $104 being the most you put in for a one week period, you can save $2,756 a year! Children can earn this money through doing chores, helping their siblings, completing homework, or being kind. You can adjust what and how they earn based on their age. Children will then have to be taught whether to spend their money at the end of each week for something small, at the end of the month for something medium-sized, or wait until the end of the year for something big!
3. Your child can get a job and you can match their earnings.
If a child is under the age of 18, The Fair Labor Standards Act (FLSA) sets the general minimum age of 14 for a child to legally be employed in the United States. The FLSA also limits the number of hours worked by minors under the age of 16. You can check www.dol.gov for more information based on the state in which you live. If your child starts working at a young age, they can start saving money on their own and or with your assistance. You can even match what your child makes! If your child contributes $300 a month, then you contribute $300 a month. These funds can be placed in a savings account of some kind that your child may or may not have access to until a certain age. You can even take a percentage of this earned money to be used for free spending or charitable giving.
4. Lead by example.
I often believe being a role model to the lives that look up to us is the best way to educate. If we can teach our children the value of money by showing them how we spend, save, and give, that is the best way for them to learn. Create a weekly grocery budget for them to pick out pre-approved foods they want to eat from the store each week. If it’s not in their food budget, they will learn that they will have to put something back or not get certain things on their list. This doesn’t include certain items the whole house shares like dinner food, but could include snacks, drinks, and even breakfast foods and lunch items depending on their age. If you donate to a local charity or even tithe to your local church, let them help. Let them put the money in the offering bowl or let them save money to donate to a charity of their choice. A great charity for children is Olive Garden’s Pasta for Pennies, often done in schools by saving pennies, Pasta For Pennies is a program benefiting The Leukemia & Lymphoma Society‘s School & Youth campaign.
5. Open a 529 College Savings Plan.
You can teach your children about saving money by teaching them how to save for their college education tax-free! With a 529 plan, you choose from a variety of investment options (similar to a 401k) as soon as they are born. The account legally belongs to the parent, not the child. And if your child decides they are not going to attend college, then the parent can change the beneficiary. Funds can only be pulled tax-free for qualified education expenses (tuition, books, room and board, etc). If any of the money is spent on other items, it might be subject to income tax. Other restrictions may include how much money you can save each year and how many times you can add to the account each year. You can review your statements quarterly or yearly with your child and show them how much money is being saved so they can see the amount grow. Not only will they get excited about saving the money, but they’ll also get excited about pursuing a higher education. Talk about a win-win!
6. Open a savings, money market, or CD (certificate of deposit) account.
I suggest a money market account over a savings account so you can benefit from higher interest. Money markets will also allow you to remove money at any time without penalty. A CD can offer a high interest rate that doesn’t change like a money market would over the course of the term. However, if you have to pull money out of your CD, you may be subject to withdrawal penalties. Some money markets and CDs (and even some savings accounts) require a minimum balance to open and to maintain the account. If you get money taken out via direct deposit for these types of accounts, you will not have to take the money out yourself. What you don’t see, you are less likely to spend! You can review the interest on these accounts with your children so they can see the amounts of money grow.
Whichever method you decide to use to teach your children about money, starting early will help them learn more about responsibility at a young age and will benefit both of you as they grow.
Check out even more about the Greenlight app here: http://welcome.greenlightcard.com/heymama