Do your kids think money just grows on trees? Help them imagine more.
“Why can’t I get that toy? Everybody has one!” And then there is, “Mom, I’ve run up a huge credit card bill.” Or, “Dad, I don’t have enough money for gas.” Sound familiar? What can you do to help your kids start to understand the value of a dollar? You can start by talking to your kids about financial responsibility early!
Allowances
One of the best ways to teach younger children about the value of money is by letting them earn an allowance. It can be a great opportunity to have an active, ongoing conversation with your child about money management. Usually, around the ages of five to seven, children start to grasp the concept that money is needed to pay for things. Follow these tips to make it easy and fair:
- Be consistent: Establish a monthly, bi-weekly or weekly payment schedule.
- Use a formula for payment, such as 50 cents or a dollar per year of age. This can also help curb sibling conflict by setting a standard and prevent requests for increasing allowances.
- Keep chores separate from allowance: Chores need to be seen as contributing to the family, regardless of any monetary reward.
- Teach your child to think ahead by putting money aside for savings and charity: Again, be consistent with minimum, regular contributions to these areas, such as 10% each for savings and charity or splitting everything into thirds – savings, charity, and spending.
Before starting to pay an allowance, however, make sure you see signs that your child thinks about how they would spend the money, or that these money lessons will stick.
Other ideas that can help include explaining price tags, showing them how to complete a transaction using their allowance, or even by setting a good example yourself.
Savings Accounts
When children enter first grade, it is often the right time to start encouraging good financial habits by opening their own savings account. There are tons of great options to choose from, although we have to admit we are partial to one account in particular.
The Tomorrow’s Tycoons account from First Internet Bank is like a digital piggy bank, with no monthly fees, 24/7 online access, and unlimited deposits. Better yet, it converts to a free savings account at age 18. Once the account is open, you can log in from anywhere; your laptop, tablet, or cell phone to perform basic banking tasks with your youngster. It goes where you go!
By demonstrating smart, responsible, financial behavior and keeping the lines of communication open about saving and spending, you will help prepare your children for the financial responsibilities and independence of adulthood.
If you’d like to learn more about our Tomorrow’s Tycoon account, contact one of our First Internet Bank Relationship Bankers at bank@firstib.com or 1-888-873-3424. Member FDIC.
First Internet Bank opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. With assets of $4.2 billion as of March 31, 2021, the Bank provides consumer and small business deposits, consumer loans, residential mortgages and specialty finance services nationally. The Bank also offers commercial real estate loans, commercial and industrial loans, SBA financing and treasury management services. Additional information about the Bank, including its products and services, is available here. The Bank is a wholly-owned subsidiary of First Internet Bancorp. First Internet Bank is a Member FDIC.