Teaching financial responsibility is crucial to helping your children understand the importance of saving and managing their money. Conversations about money will differ depending on the stage of your child’s development. If your child is young, talking to them about saving is one of the first steps in helping them learn financial literacy.
As your child grows, consider teaching them to both save up for what they want to buy and to save up for the future. One way to do that is to go to your bank and open a savings account for your child. Teach them about interest and how their money can grow the longer they leave it there. You can also encourage extended family to get in on the lesson by asking that they gift things like savings bonds rather than toys to show your children how money grows in long-term savings accounts.
When your children are older, they can graduate from savings to a checking account, the next step to teaching them about money. Not only can they learn to read monthly statements and to login to online banking accounts, but it can also give them their first introduction a debit card. Debit cards teach children that they cannot spend money they do not have. It is also important to explain that they should still have money saved for emergencies. According to the Consumer Financial Protection Bureau, a good rule of thumb is to save 10 percent of what you earn and have at least three months’ worth of living expenses saved.
Over time, you can incorporate other important financial lessons that include the importance of credit cards, credit scores, retirement accounts, and how to file taxes. There are many resource guides for parent’s that may help in teaching children about money.
If you are looking for additional financial tips, your Component Employee Assistance Program (EAP) can help. EAP is available 24 hours a day, 7 days a week to help you manage your financial concerns. For more information or for help in contacting your EAP, contact your DHS Work-Life specialists at email@example.com.