By: Francine Knowles
April 26, 2010
Parents can play a key role in teaching their children financial literacy, and help is available through the American Bankers Association Education Foundation.
Among tips the foundation offers for parents:
- Recognize that children learn from you. Set a positive example by paying bills on time, spending money wisely and saving. Look for opportunities to discuss money and play games that center around spending money wisely.
- On family shopping trips, discuss budgeting, spending and saving with the kids. Provide examples of needs vs. wants -- milk for example, needed to build strong bones, vs. pop, a want.
- Have children begin budgeting by dividing any money they receive into four clear jars labeled sharing, spending, short-term savings and long-term savings. They should deposit 10 percent of their money in the sharing jar, 30 percent in the spending jar, 30 percent in the short-term saving jar and 30 percent into the long-term saving jar.
- Make a list of chores. Put a dollar amount to be paid next to each chore, and let children choose which chores they want to do based on how much money they need that week or month.
- Have older teens list expenses and income. Under expenses, include spending for bus tokens, lunches, movies, etc. Have them subtract expenses from income, and help them devise ways to reduce their spending. If their income is more than expenses, discuss with them a savings plan.
- Give them a budget assignment. Have them pretend they are in charge of planning a birthday party at home for another child who can invite four friends. Tell them to estimate the total costs each for having the party at a restaurant, vs. an amusement park and a bowling alley.
- Take your children to the bank and show them how transactions work. Get the manager to explain how the bank operates, how money generates interest and how an ATM works. Ask the manager for a tour and to see the vault.