Today's Homework: Earn, Save, Budget
April is Financial Literacy Month and everyone age 5 and older can learn about becoming financially literate.
Simplifying the concept of saving versus spending and using relatable examples are key to teaching the value of money to children. Instill healthy financial habits early on to ensure they grow to be smart managers of their money.
- Allowances. Give your child an allowance that they must earn from helping with an odd job or with something above and beyond, such as wiping windows or raking the leaves and not for chores they are expected to do on a regular basis such as cleaning their own bedroom. This reinforces the idea that money must be earned without creating an expectation of getting paid for any good deed done around the house.
- $ave, $pend, $hare. Use 3 jars to designate as the “Save” jar, “Spend” jar and “Share” jar. Explain that money in the Save jar is for larger purchases to be made in the future, money in the Spend jar is for smaller purchases like toys or music they want to download, and money in the Share jar is for a charity they can choose. Give the allowance in coins or one dollar bills so they can divide it easily among the 3 jars.
- Open a kid’s savings account. A savings account will allow you and your child to monitor the account together. Praise them when the balance increases from a deposit they made and watch the account grow if it accrues interest. Teach them to put a portion of money received as birthday presents in the savings account instead of spending it all on wants or a day out with friends. Plus, you can foster the idea of how a savings account can help reach both long and short term spending goals that your child might have, such as buying a new bike. Learn more about our Keiki/Patgon Savings Account and how to open an account.
- Live out what you teach. Demonstrate money saving habits for your child by eating in for dinner on some days or brining your morning coffee from home. Then explain to them how these little steps are helping to pay for a family vacation or to save for emergencies and the unexpected.
- Budget for an outing and stick to it. Announce what your budget is before you arrive at the grocery store or when you head out for back to school shopping. Challenge your child to compare prices and figure out which item had the best value for its price.