By Ann Tieman, Vice President-Retail Office Management  | NMLS# 709642

Many parents feel unsure of how to teach their kids about the value of money and how to develop good habits for spending, saving, and sharing.

Effective money management is a life lesson our children will not only use their entire lives but that will significantly impact the quality of those lives.

We will explore some good options and discuss the reason they work, but these are simply suggestions to make you think about the best approach for your situation.

Getting Started

One of the most common questions regarding kids and money is whether to give an allowance or provide options for earning potential? Both work and can even be used together by starting with a small allowance and then offering ways to earn more. To be clear, there is no one right and perfect way to establish money skills.

The most important thing is to find something that:

• works for your family
• is easy to maintain with consistent follow-through
• encourages regular conversations about money

Age-Appropriate Lessons

Children are getting exposed to the concepts of money younger and younger. In fact, even very young children might have more money than you realize! Money from grandparents and extended family tucked into birthday cards along with cash from babysitting or mowing lawns can add up quickly—even before they have a regular job. Therefore, it’s a good idea to start modeling money management while they still live under your roof.

One of the first lessons to teach young people is the concept of save, spend, and share. These concepts can be tailored to any age and stage of money management maturity:

• Saving for a bigger purchase or long-term goal might be one of the most difficult behavior management life lessons for people of any age. A great way to help kids see the savings add up is to put money in a clear jar or piggy bank so they can physically see it grow. Making a chart or graph with a photo of their goal can also help.
  
• Spending might seem to come naturally to children, but the key here is to teach them priorities around spending. Give them choices so they have to think about how to get the most out of their budgets. For example, give them a limited budget for the concession stand and then show them multiple ways to spend that budget. Then let them choose all on their own. If they regret their choice afterward, use it as a good conversation starter about what they might do differently next time.
  
• Sharing is often an easier concept for kids than “giving” or “donating.” They have grown up learning to share resources like toys or snacks, so the real lesson might be the conversation around why and how to share their money. Give examples of how the adults in their lives might donate or contribute to a cause. Even something as simple as participating in a school fundraiser can help make those connections. Or perhaps, a grandparent is going through a health issue that you decide as a family to donate for research or treatment.

In addition, there are other ways to go beyond these basic concepts to help children discern the value of money and how it works:

• Explain where money comes from in simple terms. You get paid for the work you do and save it over time to pay for your house or apartment, your food and clothes, and for entertainment.
  
• Involve your children in everyday transactions. Let them handle the cash or credit card when you are paying for something and explain that this card takes money from your bank account and pays for the item(s).
  
• Play board games that involve handling money.
  
• Make mealtimes a math puzzle. Show them the ingredients and how much they cost to provide some context regarding how a meal at home versus eating out might differ.
  
• Visit sites like kidsmoney.org and mymoney.gov/for-youth for more age-related ideas and resources.

Tools of the Trade

Lake Ridge Bank can help your child develop good money habits, too! Some tools to consider include:

• Coin counter: Make your child’s first experience at the bank even more fun by bringing in that big jar of coins for counting and cashing in (or depositing). And don’t forget to get them a free glass of root beer in our lobby.
  
• Junior Savers account: Open a custodial account where your child is the account owner, but the adult controls the transactions. Lake Ridge Bank will help your child get a good start on saving by adding a special bonus to each newly opened Junior Savers account. In fact, from June 16^th to July 31^st, we’ll deposit $50 into their new Junior Savers account. This is an interest-bearing savings account to get new savers started out right.
  
• Joint account: As a teen, your child may be ready to transition to a traditional joint account that gives the child slightly more control under the supervision of a parent or grandparent. This type of account enables checking account privileges (if desired) with some of the cashless payment options outlined in “How to Help Kids Pay at Cashless Venues.”

The End Goal

Ultimately, the method you choose matters less than the effort because any technique that helps identify questions your kids may have and spurs conversation about money is a good place to start.

In truth, each child will have different strengths, different questions, and different priorities. Only the end goal is the same: give them practice with managing money and help them feel comfortable learning more. We all make mistakes. Ideally, their money mistakes will happen when they are 10 instead of 30 or 40, so they will be small-but-valuable lessons in the grand scheme of life.

To learn more about the Junior Savers Program or any of the tools Lake Ridge Bank offers to help kids learn good money habits, visit lakeridge.bank/junior-savers or stop in to the Lake Ridge Bank location near you.