Talking to your kids about money can be difficult, but it’s also one of the most important conversations you can have.
Learning how to earn, manage, and appreciate the value of money at an early age gives children the foundation they need to succeed down the road. As a financial institution founded by teachers, SELCO is committed to helping Oregon parents educate their children about money matters. Here are 10 ways to get the discussion started and keep it going:
1. Start with an allowance
What better way to learn the value of money than by earning it? Create a set of chores and weekly payment schedule, and teach your kids that when one week’s money has been spent, they’ll have to work hard and wait for their next allowance. By earning the money they spend, children learn not only how hard work can lead to fun, but also how to stick to a budget for future purchases.
2. Stress the importance of saving
There are many benefits of smart savings habits, such as self-discipline, learning to distinguish between wants and needs, and being able to afford unexpected expenses. And the earlier they start, the better. Encourage your child to set a portion of his or her earnings aside each week and keep a running total in their SELCO savings book. Watch together as a little money here and there can add up quickly.
3. Be their first lender
Your children will eventually want something they can’t afford right away (a cell phone, computer, concert tickets, etc.). When that happens, teach them about borrowing—and paying back—money. Lend your children the amount they need, charging a small amount of interest, and set a date by which the loan must be repaid. And why not put that new cell phone to good use by transferring and tracking loan payments with SELCO’s Mobile Banking app?
4. Show them hard work pays off
As your children get older, and their chores grow in number and difficulty, increase their allowance, even if only by a small amount. Instilling a work/reward mentality will serve them well in the short and long run.
5. Get them their first credit card
If you are the parent of a teen, it might be time to discuss the convenience and benefits of using a credit card responsibly. Help your child pick out a card and monitor card usage, at least at the outset. SELCO’s Vault Visa, with its low interest rate and no annual fees, is a safe and easy way for your teen to establish good habits and credit.
Investing is an essential skill ... and the earlier you begin, the better.
6. Set new challenges
As your children’s financial knowledge and experience grows, have them set increasingly challenging goals for themselves. Celebrate their successes and support them in failures. This will go a long way toward reinforcing the benefits of responsible money management and meeting personal objectives.
7. The benefits of long-term savings
As your child’s savings increases, consider interest-bearing accounts as a way to make this money grow further. Give us a call, and we’ll be happy to review available options and give you the information you and your child need to continue the conversation at home.
8. Know the market
Low-risk investments can teach the basics of saving for the future without jeopardizing all the hard work that brought your child to this point. Investing is an essential skill in growing savings. Start early.
9. Fixing mistakes
Sometimes the most important lessons we learn come from our own missteps. Teach your children to accept responsibility when they spend too quickly, borrow too much, or save too little, and support them by helping develop a plan to put things right again. Need an extra hand? You can always set transaction limits and merchant restrictions using Card Manager by SELCO. Want to create a budget? SELCO Money Manager can help with that, too.
10. Discuss privacy issues
Unfortunately, identity theft isn’t going away anytime soon, so it’s essential that your kids know which steps to take to protect themselves and their finances. Caution them on the potential dangers of online shopping and loaning cards to friends, discuss tips for setting strong passwords, and remind them to check their accounts regularly and log out of mobile banking when not in use.
The more financially savvy your kids are, the more confidence they’ll have when it’s time to navigate the world as an adult. But no matter which step of the journey they’re on, whichever financial goals or obstacles arise, we’re here to help keep their financial futures growing (even if we can’t keep them from growing up so fast).