Teach Your Children about Money this Financial Literacy
Month
Special to The Truth
April is Financial
Literacy Month, an ideal time to think about the lessons
your children are learning about money. Setting a good
financial example is just the start. Parents should also
actively engage children on the topic. These lessons can
help put kids and teens on the right path towards a
financially responsible adulthood.
How Money Works
Now that many consumers
use credit or debit cards, buy things online and even
purchase movies on their televisions and mobile devices,
children may not realize when you are actually spending
money and that money is needed to buy things.
Take time to explain to
them that products and services have different prices. They
also need to learn that money can be spent only once, and
that after buying something, a person needs to earn more
money in order to buy something else. Play “grocery store”
or other games that involve buying and selling items. Take
turns being the cashier and the customer.
Saving for a Goal
Teach your children that
some things cost more money than they may have now, and that
saving means putting some money aside a bit at a time until
you have enough to buy what you want. Kids can learn to keep
money in a safe place and practice their math skills by
keeping track of the amount saved for future spending.
To maximize the benefits
your child receives for saving money, you may want to
consider a Uniform Transfers to Minors Act (UTMA) or
custodial bank account. Those offered by Ally Bank Member
FDIC, for example, earn a competitive rate of interest with
no monthly maintenance fee. Plus, there's no minimum balance
to open the account. When opening such an account, use this
as an opportunity to discuss interest and other basic
banking concepts.
The Importance of Self-Control
Help your children learn
the difference between needs and wants or wishes. Explain
that although everyone really wants things like toys and
electronics, you have to pay for needs - things like food,
shelter and heat - before you can buy items that are wants.
Help your children come up with a plan to save and spend
their own money that takes into account their wants and
needs.
Making Spending Decisions
The next time you need to
make a big purchase, talk it through with your child.
Explain how you weigh the pros and cons. Show how taking
time to ask questions, learn about different choices, and
compare what’s good and bad about each choice helps you
reach good decisions.
“Financial literacy
ideally begins in childhood. Even young children should
learn about basic concepts like saving for a goal and
spending only what you can afford,” says Jacqueline Howard,
director of Corporate Citizenship at Ally Financial.
There are many resources
to help you talk to your kids about money and finances.
Parents can download a free ebook from Ally Bank about the
basics of money to share with their children at
allywalletwise.com or visit fdic.gov/moneysmart for
resources for all ages.
This April, take the time
to boost your children’s financial literacy and enforce the
concept of smart money management.
Courtesy StatePoint
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