A sound financial future is most likely when you understand the basics of finances from a young age. Here is our guide to doing so.
1) Ensure your child knows what types of money there are, from coins to notes. Next, work with them to add and subtract. Now they understand the concept of change during payment or addition of funds when saving.
2) If your child does not already have a bank account, now is the perfect time to open one. Next, teach them about earning money. If they complete X number of chores per week or month, they will receive payment for those chores.
3) Talk to them about spending versus saving. Decide on a savings goal for the year. Explain to your child the benefits of saving for something they need versus something they want. It is important children learn the responsibility that money brings once they have it.
4) Once your child sets spending and savings goals, you should work with them to create a budget. They will know what money they should place in their savings account versus disposable income.
You may also want to talk about money gifted on birthdays, at Christmas, and other holidays. Can they spend the money? Or should some, or all, of it be placed in savings? And is that short or long-term savings? If your child can make informed decisions about money early on, they are more likely to make sound financial decisions as an adult.
5) Last, but by no means least, talk to your child about daily expenses and saving for the future. Talk about the investment in buying a car, house, or launching a business. Talk about saving for college and ask your child if they want to contribute to their college savings account. It is worth talking about retirement as well. If they take on a summer job or weekend work, they may have the option to contribute to a 401K. So have the conversation sooner rather than later.
If you would like any information on opening an account for your child, no matter their age, get in touch with your local branch or find out more at www.wbsb.com.