Money lessons

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By Scott Steinberg

Money lessons

Parents often remind their children that money doesn’t grow on trees. But there’s more to the lesson.

We live during a time where financial transactions occur with a simple click, swipe or tap, and many times those transactions are made with little thought. It’s important to teach the children of this tech generation, who have never seen a paper ledger, to remember that there are smarter ways to balance their budget and spend their cash.

The American Psychological Association has several recommendations when it comes to teaching adolescents about money but recommends talking about money as the most important action a parent can make, saying, “Talking about money and modeling good money management habits sets children up for a future of financial success.”

Kids can understand the importance of saving, the need to be more financially savvy, and the practical value of every dollar — but you need to approach it on a level they can understand.

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Age 3 to 4: At this age, money lesson are basic — what is money, what does it look like and what do we use it for. Teach kids how to identify and name coins and set up a play store to demonstrate how shopping works. You can also explain what’s happening when you use a credit card, check or ATM.

Age 5 to 6: Begin to explain how prices work, how much things cost and how money is earned. You might also consider giving kids a small allowance (roughly $1 for every year of age) to teach them good money-management habits. It’s also the right time to start regular savings habits, too.

Age 7 to 8: Help your child open a savings account and get them in the practice of making regular deposits. You may also wish to explain how interest works, how savings grow and how sums that are invested can earn more money over time. Discuss wants vs. needs and how operating on a limited budget works.

Age 9 to 10: Introduce the idea of comparison shopping, price matching and buying generic vs. brand-name goods. You might also ask your child to help you with garage or yard sales, lemonade stands or other curbside enterprises. The practice teaches them how to work with customers, make decisions and set prices/values as they go. During this period, you can further start getting kids involved in family budgeting discussions.

Age 11 to 12: Give your tween practical ways to experience real-world financial responsibility. Ask them to help plan a birthday party or family get-together. They can begin by building a budget and help plan for purchasing needs for the event.

Age 13 to 14: For educational purposes, introduce your financially savvy teenager to the stock market, bonds and the practice of investing in general. They don’t need to actually invest to understand how the market works you can supplement that by watching financial news programs with them. You might also help them plot out plans for how to afford big-ticket expenses, such as saving up for a car or heading out of town on a school trip.

Age 15 to 16: Show your teenagers how borrowing and lending works and introduce them to the ideas of interest and credit. It’s important that they gain a good understanding of how to manage debt.

Age 17 to 18: Discuss college costs. Together, plan how to pay for college — comparing schools and financing plans for each scenario. Introduce them to the types of complex and comprehensive budgeting plans that they’ll often face as an adult. In addition, you may want to look into a checking account (like the Credit Union's uChecking account) to allow them to self-manage aspects of regular spending. Let your kids start talking with a financial planner about their overall savings goals.

American Airlines Federal Credit Union offers a number of products that are designed to set young members up as they begin to build a solid financial foundation.

Savings: Teaching children how to save is a basic lifelong lesson — a share savings account is a great way to start. The Credit Union offers several account options to fit different needs, but every Credit Union membership begins with share savings with dividends earned on every dollar.

uChecking: For Credit Union members, ages 13 and 25, this account is designed specifically with their needs in mind. With no monthly service fee with activity, no minimum balance requirement and up to $15 in ATM fee rebates if you meet the requirements, this is the perfect starter account for members who are beginning to manage their own money.

Dream Plan: This long-term savings option offers a smart way to save for those bigger dreams. Whether it’s a down payment on a car, a computer upgrade or a college trip with your friends — you can start small with a $25 initial deposit then contribute at least $25 each month.

Education Savings Account: This account is designed to make contributions that are invested for the purpose of funding a student’s education. Though these contributions are not tax-deductible, they may earn tax-deferred interest until distributed.

Scott Steinberg is an award-winning professional speaker and management professional. He is the bestselling author of Think Like a Futurist, Make Change Work for You, and Fast Forward: How to Turbo-Charge Business, Sales, and Career Growth.

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