Even if managing money isn’t your strength, you can still teach your kids what you've learned along the way and talk to them about mistakes you've made. You don’t have to break out your last account statement to show your kids, but you can discuss common issues they’ll encounter as they grow up, move out of the house, and start to create a life of their own.
As outlined in House Bill 51901, all public high school students in Michigan are now required to take a personal finance class before graduation. While this is great news for future students, there are still plenty of activities and discussions you can have at home before your child reaches high school age. You might not consider yourself to be a subject matter expert on personal finance, but chances are you know more than you think you do. After all, managing an account and making purchases is part of your everyday life.
Think about financial experiences that you would be comfortable sharing with your children. How did you purchase your first car? Talk about something that you really wanted and saved up for. Don’t forget to mention money mistakes or shortfalls so your child understands that everyone makes errors.
The subject of personal finance has many parts, so it’s important to break up your conversations based on your child’s age and comprehension level. The best way to get your child involved and excited about money is to have a conversation with them, don’t lecture them. Here are some easy ways on how to talk to kids about money.
Practice matching up the name of a coin to the coin itself. Try mixing a pile of change and ask your child to pick out the coins by name.
Give your child some money and present a few items to them with a price on each. Let your child go to the “store” and pick out a few items to buy. Discuss how much money they'll need to buy the item and how much they'll have left if they buy a cheaper item.
Give your child a weekly allowance. You can either do this by giving your child a specific dollar amount each week or by assigning tasks with specific dollar amounts attached to each task. The rule of thumb is to pay your child 50 cents to one dollar per year of age. So, if your child is 8 years old, they would start out with a weekly allowance of $4 per week.
Take your child with you next time you visit a Lake Trust branch and open a savings account for them. You only need five dollars to open a Lake Trust Youth Membership Savings account and this account does not have any minimum balance requirements. Explain to your child why you're opening the account and set weekly savings goals. Keep a ledger and help your child record their transactions.
Go over the weekly ads and compare prices of items on your shopping list. Show your child how to look for sales and coupons. Let them hang on to your coupon book or show them the store app on your phone when you go shopping so they can match the coupon to the product.
Emphasize that credit is borrowed money that you must pay back. Explain the consequences of not paying back the full balance and the difficulties of being in debt. And talk about how to keep track of your account balance when you use a debit card. Take each card out of your wallet and explain if they are used for debit or credit.
It’s a good idea to keep spending money separate from savings. Start teaching your child about budgeting and open a checking account for them. If your child has a smartphone, have them download the Lake Trust Mobile App so they can check their balances and keep track of purchases.
Sit down together and discuss college plans. What subject does your child want to major in and what type of education would be best for their desired career path? Find financial aid and student loan options and discuss how to repay those debts. Even better, look into scholarships and grants from local community organizations, like the Lake Trust Foundation.
Talking about money doesn't have to be boring. Turn each learning step into a new adventure and enjoy spending time together. Your patience and willingness to talk will help your child become more independent and gain the confidence they need to make financial decisions in the future.
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