Good savings habits are best modeled, but there are at least five things that parents can do to teach kids how to be financially responsible:
1. Be specific when telling children what things cost.
Young children lack points of reference when understanding the true cost of a toy, electronic game or cell phone.
2. Let them make choices with money beginning at a young age.
Consider starting kids out with a weekly allowance in elementary school. Help your kids open a bank savings account, showing them how regular savings build up over time.
3. Ask the right questions before making a purchase.
Do children really need the most expensive pair of sneakers? Would checking a novel out from the public library for free be better than buying one at a mega bookstore?
4. Set up “buckets” for short, intermediate, and long-term goals.
Young teens should be able to differentiate between near-term needs (a movie this weekend), intermediate needs (back-to-school clothes), and long-term goals (college).
5. Start early, but don’t overstress.
Don’t expect children to be perfect with money from day one — for all of us, managing our financial lives is a “work in progress.”
For more information, contact Lake Michigan Investment Services by visiting online to lmcu.org/investments, or call (616) 234-6358 for a free, no obligation financial review of your unique situation.