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Financially Fit Kids

Source: Navy's Fleet and Family Support Centers

How do our kids learn to manage money? At school? By watching TV? From their friends? By their own mistakes? From watching their parents manage their money?

Most children learn from all of these places, but studies show that the single most important place where children learn about money is in the home and the most important teachers are their parents.

Studies also show that the earlier children are introduced to the fundamentals of money and money management, the more financially fit they are as young adults. As with every other aspect of parenting, with the right information and commitment, parents can prepare their children to conquer the many financial challenges they will face as adults.

Here are some ideas on how to teach your kids about money:

Kids’ Budgeting
The rule for budgeting is “keep it simple.” This applies to your children AND to you! The saving/spending/sharing approach forms the foundation for a budget, but a true budget is some type of a written system (including software and online systems) that keeps track of what comes in and what goes out, lists financial goals, and tracks spending.

Age-appropriate techniques for introducing budgeting to children include:

Ages 3-5. As soon as children can count, introduce them to money and take an active role in giving them information. Talk about money and show them how much things cost. Have them start making choices about buying small items. Help them learn about coins, paper money and basic counting. Help children learn the differences between needs, wants, and wishes.

Grades K-2. Introduce a weekly allowance and the concept of saving/spending/sharing. Use jars or envelopes, or have them make their own piggy banks and help them to start setting short-term goals. Let them see you doing your own budgeting and bill-paying. Educate them on the power of advertising and talk about peer pressure.

Grades 3-6. Take a trip to the bank and help them open up a savings and/or checking account. Explain the power of interest and saving for the future. If appropriate, continue using savings banks or jars for saving/spending/sharing and build on that by introducing them to a tracking system or basic budget. This can be as simple as a notebook listing “income,” “expenses,” and “goals.”

Younger Teens. Help them look for paying jobs outside the home. Help them set long-range goals. If they don’t already have a saving or checking account at the credit union or bank, take them to open one. Help them learn to access their accounts online and teach them how to protect their identity. Talk to them about credit and the cost of borrowing money.

Older Teens. Help older teens develop more independence. Support their savings strategies. Help them assess job opportunities, standards of living and major life purchases. Show them financial planning software. Have a frank discussion about things people need to spend money on (food, shelter, clothing, transportation, insurance, etc.) and things people WANT to spend money on (eating out, expensive apartments and/or homes, name-brand clothing, fancy cars, etc.). Discuss the costs of college, what your family can realistically afford, and explore alternatives. Ensure that when they leave home they have the skills to function in the financial marketplace.

The Navy's Fleet and Family Support Centers promote the self-reliance and resiliency of Sailors and their families. We provide information that you need to meet the unique challenges of the military lifestyle. For more information, stop in one of our Fleet and Family Support Centers, visit our website, our Facebook page, or follow us on Twitter. 



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