When it comes to your child’s financial literacy, there are quite a few lessons to be learned. But where to begin?
Actively seeking teachable moments in everyday life can be a great way to engage with your child or teen about key money topics and help them build the personal finance skills they’ll need throughout their life.
9 Teachable Moments
Whether your child is just learning to read or gearing up for college, there are plenty of opportunities to introduce key financial concepts. Here are just some of them.
- Grocery Shopping
When your child is younger, visits to the grocery store are a prime opportunity to teach financial fundamentals such as how to distinguish between needs (such as healthy food) versus wants (candy at the checkout aisle). You can also explore budgeting skills like comparing prices, using coupons and buying items in bulk.
Lesson learned: Money is limited. It’s important to make careful choices about what we buy. - Paying Allowance
Giving kids an allowance for doing household chores teaches them the value of hard work. Using clear jars or other containers, help your child divvy up allowance money into savings and spending categories for a hands-on approach to basic budgeting. When they’re ready, help them open a savings account and make regular contributions to save up for a toy or game that they really want, teaching them the value of delayed gratification.
Lesson learned: Money must be earned, and saving helps put this money to the best use. - Trips to the Bank
Show how you put the money you earn into a checking account, where the money is kept safe and can be taken out when needed. Discuss how you budget for different expenses, splitting up your paycheck for essentials like housing, food and clothing, as well as setting money aside for emergencies or long-term goals.
Lesson learned: People use banks to help protect their money and access tools like debit cards and online banking to help them spend and save. - Visiting an ATM
Demonstrate the process of withdrawing money from the ATM. Explain how the money you take out reduces your account balance, so you track your available funds to avoid extra costs or problems due to overdrawing your account. Also, emphasize the importance of relying on ATMs in safe, well-monitored locations such as bank branches.
Lesson learned: Pay close attention to your account and prioritize safety at the ATM. - Paying by Credit Card
Explain how using a credit card is like taking out a small loan for each purchase, and that you will need to repay this money when your credit card bill arrives. When your child is old enough, talk to them about the importance of using credit responsibly and repaying on time, as well as the potential consequences of unpaid debt.
Lesson learned: A credit card is a helpful tool, but borrowing is also a major responsibility. - Managing Bills
Show how you pay for monthly expenses like utilities and your cell phone, whether by mailing in a check and remittance stub or by submitting payments electronically. Explain that you need to allot enough money for these expenses every month to keep receiving these important services (i.e., paying bills keeps the lights on).
Lesson learned: Staying on top of bills helps ensure your family’s needs are met. - Paying Your Mortgage
Talk to your teen about how your mortgage gives your family a comfortable place to live while supporting your financial security in the future. Break down your mortgage statement to help them understand how you pay back both principal (borrowed money) and interest (the cost of borrowing).
Lesson learned: Homeownership is an important way to build wealth, which you can achieve through responsible borrowing. - Planning for College
Talk candidly about the financial implications of higher education. Explore the financial impact of their choice of school – such as a private college versus an in-state public university, and team up to complete the FAFSA® and look into options like loans and scholarships. Stress the importance of careful planning to effectively manage student loans.
Lesson learned: College costs are a big deal. Decisions they make now can affect their finances in the future. - Opening the Mail
Once they’re older, your child may start receiving mail advertising credit cards or bank accounts. Talk with them about the financial responsibility that comes with accepting these offers, as well as the importance of comparing options and reading the fine print. Point out that accepting numerous credit card offers can be risky and damage their credit.
Lesson learned: As an adult, your child needs to choose financial products carefully and avoid the risks that come with relying too much on credit cards.
Keys to Teaching Financial Skills
Help your child get the most out of these financial lessons.
- Keep conversations age appropriate. Younger kids need to know the difference between needs and wants. Teens need to see how this influences their monthly budget.
- Show, don’t tell. Whether reading a bank statement or paying a bill, walk your child through the actual process.
- Emphasize the why. To show your child the importance of financial essentials like saving and budgeting, translate them into real-life benefits, such as being able to buy their first car or avoiding financial stress.
Smart Ways to Start Banking
Now could be the perfect time to help your child or teen open Amegy’s Young Savers or Anytime Checking® account – both include Monthly Maintenance Fee waivers for customers age 25 and younger.