“Kids these days don’t understand the value of a dollar.”
It’s not just a cliché. Data shows that there may be some truth to it. A 2021 paper published by the Milken Institute found a lack of financial acumen among young people could be a “barrier” to their ability to advance economically.
So how can you help your child build healthy financial habits? These three tips are a good start.
Be a role model
In an interview with CNBC, Mac Gardner, certified financial planner and author of books that foster financial literacy in children, said that spending habits are “the No. 1 behavior children learn from their parents.” So teaching kids the importance of budgeting, spending prudently and saving can set your child on a path to financial well-being.
Explain what you have done right — and wrong — with your finances. Give examples of how healthy financial habits benefited your family, like how saving a set amount every month helped you buy your family’s home.
Help them open their first savings account
It’s never too early to start saving. Set your kids on the right path by helping them open a savings account at a young age.
Encourage your child to make regular small deposits and explain the concept of interest. Maybe have them start by thinking about something they want to buy with their savings and cut out pictures of that item and put them around the house.
At Billings Federal Credit Union, kids of any age can have a savings account opened in their name. For children 11 and younger, the credit union offers Cubby Savings accounts. For older kids and young adults, the credit union’s Student Savings accounts offer a more mature approach to banking.
Talk about debt
Teach your kids about the danger of debt.
As children get older, they’re bombarded with opportunities to incur debt. Explain to them that sometimes borrowing may be worthwhile — for example to pay for their education or a reasonably priced car. Talk about how credit cards can entice them to spend carelessly while racking up outrageous interest charges. Consider whether you should give your teen a parent-controlled debit card so they can learn about using cards responsibly well before they become a credit card holder.
Ready to put your child on the path to a healthy financial future? Billings Federal Credit Union is here to help, with options that include savings, checking or even a teen’s first loan.
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