BY STACEY MACKAY
BRANCH MANAGER, BANK OF UTAH
Teaching children about finances and money principles can feel overwhelming. The good news is, it doesn’t require anything fancy or formal. Everyday experiences can be used to communicate key financial lessons and demonstrate good financial habits.
For example, parents can bring their children grocery shopping. Before heading out, make a list of needed items, such as milk, bread and laundry detergent. Set a budget and explain how much those items usually cost. While picking those items up at the store, identify them as needs: Milk is for breakfast, bread is for sandwiches and laundry detergent is for clean clothes. Then, pick up something that’s not on the list, such as a candy bar at checkout, and identify it as a want. Explain that after buying all the needed items, you can buy something you want — only if you have money left over in your budget. If you don’t have extra money, put the candy bar back and say you don’t need it.
You’ve just given your child the opportunity to talk about needs versus wants — a foundational lesson to help children understand spending decisions. See how easy that was? Don’t stop there. Continue to build the lessons over time, from needs versus wants, to budgeting, to spending and saving. Doing so will set kids up for future success, when there’s more at stake than a candy bar, like credit scores and mortgages.
Children want their parents to teach them about money. That’s a fact. A recent study showed that kids are eager for parents to share their financial wisdom. T. Rowe Price’s 11th Annual Parents, Kids & Money Survey found half of the children surveyed wished their parents taught them more about finances and financial decision making.
As you teach your children about money, here’s one final piece of advice: Be open with them about your own experiences with money. Help them learn from your mistakes and your successes.