Lafayette Federal Credit Union
Vice President, Business Development
It’s that time of year again. Backpacks are lining the shelves, leaves are beginning to fall, and children are scrambling back to the normalcy of a daily routine. Back to school means back to learning, and whether your child is collecting coins around the house or experiencing the excitement of a first job, it’s never too early to start educating them about money. Read on to learn about ways you can help your child get ahead of their financial futures.
As your child enters the early stages of managing their income, one idea to consider is opening them a savings or checking account. Having an account allows them to keep all their money in one consistent place while simultaneously learning vital banking skills. Learning basic concepts like how to make a deposit, withdraw money, or make an online payment will make the transition to more advanced banking concepts much simpler and more accessible. Additionally, opening an account for your child will allow them to start building a good financial foundation for future credit applications with lenders.
Financial institutions offer a variety of different account types you can open, like a dividend-earning Lafayette Federal Savings AccountOpens in New Window that can both be opened with a minimum deposit of only $50. For children 16 +, consider the accessible convenience of a Lafayette Federal Checking AccountOpens in New Window.
When you’re young with relatively easy access to funds, it’s hard to resist the temptation of buying what you want when you want it. One great way to get your child ahead with their finances is teaching them the importance of setting long-term financial goals. Short-term goals like ice cream or movie tickets are fun, but when constantly spending on such items can create a habit of reckless spending.
If your son or daughter is wishing for something more expensive, consider encouraging them to set aside a small sum of each paycheck or allowance they earn, or to cut back on weekly nonessential expenses. For younger kids, even the simple task of purchasing a piggy bank can go a long, long way in encouraging patience with money. Practices like this help children get comfortable with saving, skills that will better equip them for bigger costs like bills, loan payments or mortgages later in life.
In order to practice managing money, kids need funds to start with. If you do not already, consider the idea of paying your children an allowance as reward for completing different activities. This can include things like doing chores, receiving good grades, or looking after household pets. You can help them keep track of their earnings with a chart to give them a visual of how much they receive throughout the week. By doing this, not only will your children learn about the importance of working for their money, but they will become more motivated to set and accomplish new financial goals.
Not interested in giving your child an allowance? Work with them to find safe, convenient ways to make money on their own. Jobs like dog-walking, babysitting or cleaning houses are great ways to start earning an income at a young age.
Sometimes it is not enough to just hear about money management – kids need to see it in action. Including your children in a few basic aspects of your own finances can go a long way in helping them have a better understanding of their own. This doesn’t need to mean sharing all of your financial information. But simple practices, like bringing them with you on a trip to the credit union or showing them your budget plans for the month, can start to influence their understanding of what it means to manage money responsibility and give them a visual of different practices.
Whether you choose to involve your kids in your own finances or not, it is important to have a conversation with them about their own. As you would yourself, work with them to plan out any wants and/or needs ahead of time and decide the best method of allocation. If your child receives a larger sum of money for a special occasion (i.e., birthday present, allowance, etc.), take advantage of that time to teach them how to get the most out of it. If they are just starting to receive paychecks, encourage them to make a budgeting sheet for weekly expenses. Being actively involved in the early stages of your child’s money management can help them learn to avoid habits like misplacing their money or engaging in reckless spending.
At Lafayette Federal Credit Union, we offer financial solutions for you and your family. Everyone has a unique financial roadmap. We have the products and services to make your goals come to fruition.
Today, being financially aware is more important than ever before. By implementing these strategies, you can work to give your child a head start on their finances and get them comfortable with managing money early. Let Lafayette Federal support your family finances today and set up an account in minutes. Learn more hereOpens in New Window.
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