Thursday, September 4, 2014

Back to School: Teachable Moments in Money Management

With the dog days of summer coming to a close and school now back in session, it is the perfect time to open the books on sound money management for kids. Did your child spend the summer working for some extra cash in their pocket? Whether he or she did odd jobs around the house or worked at the local pool, why not use this time to teach your child sound financial lessons that will last a lifetime.
One of the greatest lessons of money management is that it is never too early to begin teaching children the basics of finance. Exposing your children to experiences like visiting the bank, budgeting, and paying bills will go a long way to deepening their understanding of managing their own personal finances into adulthood.
If you are looking for those “a-ha” moments to help get you started, consider these lessons that teach more than they preach:
  • Take it to the bank. Bringing your child with you on regular trips to the bank allows you the opportunity to show him or her how transactions work and the importance of establishing long-term banking relationships for future needs. To expand on the lesson, inquire about the possibility of a bank tour, having the manager explain how the bank operates, how money generates interest, and even how an ATM works.
  • On payday. Helping your child understand household finances by discussing how your pay is budgeted to pay for the essentials - mortgage, food, and clothing - may open their eyes to the resources available for such expenses. Show your child how a portion at each pay period is saved for future expenses, such as college tuition and retirement, with regular deposits to your own savings.
  • At the grocery store. Explaining the benefits of comparison shopping, using coupons, and selecting store brands, will highlight for your child how to buy on budget. You can even complement the lesson with an explanation of needs vs. wants when making purchases.
  • Paying bills. Explaining the many ways that bills can be paid will show your child the the different methods of payments available today. Whether you pay your bills over the phone, online, in person, by check, electronic account withdrawals, or with cash, discuss how each method takes money out of your account. Be sure to cover late penalties, emphasizing the importance of paying bills on time.
  • Using credit cards. Sharing how credit cards are a loan and need to be repaid will give your child needed insight into the responsible use of credit. Explain how each month a credit card statement comes in the mail with a bill. Go over the features of different types of cards, such as debit and credit cards, and the need to study them carefully to choose the appropriate card for your financial needs.
  • Pay Yourself First. Establishing a personal savings account for your child will help plant the seed for a lifetime of savings. Many financial institutions offer a minor savings account with no minimum balance requirements and an opportunity to earn interest. Show your child how to grow their money with regular deposits at birthdays, holidays, and with income from their daily chores.
The fun has just begun with invaluable learning lessons on money management! For additional tips on helping your kids increase their financial literacy, log on to www.thisismytbt.com for money activities in MyClubhouse (ages 12 and under) and MyRoom (ages 13-15). 

By: Karen Partee
       Senior Vice President and
       Chief Marketing Officer