Kids, grandkids, nieces or nephews, or even your friend's kids, teaching the young people in your life about money is important. After all, you want them to make good decisions when they're older, so helping them learn early is important. Kids need to understand that money is not limitless and everything costs something. Let them in on the conversation!
What Age do Kids Understand the Value of Money
It might be surprising, but kids can grasp basic money concepts by the time they're three years old. It's important to begin your child's money education early so they can develop and keep good habits and be ready to enter the real world as adults. They say practice makes perfect, and that's also true when it comes to learning about how to manage money.
Top Ways to Teach Your Child Good Money Habits
- Spend: Teaching doesn't have to happen in the classroom. Consider starting with grocery shopping and compare the things you need with what you plan to spend. The goal in this case is to get them used to thinking about a budget and considering the cost of each item when making decisions on what to buy.
- Save: The general rule of thumb is to save at least 10% of your income, but even small amounts add up over time. At this age, getting into the habit of saving at least something is the goal! Even $10 a month will add up to $120 in a year (even more with interest if they keep it in a savings account).
- Make it fun: Talking about money can be tough, but it doesn't have to be. When money is managed well, it can lead to independence, homeownership, and having the lifestyle they want rather than the one they have to live. It's important to make sure they know about pitfalls, but the main thing is to get them excited about what's possible.
- Keep the conversation going: Starting with the basics is necessary, but as the kids in your life grow, so should conversations about money. When they get their first job, take the time to discuss retirement and investment options so they can set themselves up for success. Remember, you don't need to be the expert on everything—that's where we come in!
WaFd Bank is Here to Help.
No question is too small, and with WaFd Bank you also have access to tools and services to help you manage your finances and get the most from your money. Visit us at your neighborhood branch, give us a call at 1-800-324-9375, or check out our kid and teen savings accounts.
$10 initial deposit required to open account.