Financial Tips For Young Children


Money doesn’t grow on trees,” and “a penny saved is a penny earned,” are two phrases you’ve probably heard before. While it might not have resonated at the time, the sentiment gains clarity the older we become with the more experience we grab in managing finances.

Although your children may have financial education during school, it’s a great idea to continue these lessons at home, teaching him or her how to save and manage money. Believe it or not, it could be the difference between reckless and responsible spending habits when your children are solely responsible for their money. Whether you start this education at age five or 15, here are a few tips on how you can give your child the resources needed for financial savvy.

Create savings goals
If your child doesn’t already have a savings account, it’s a great idea to open one. From there, you can teach him or her the fundamentals of saving money through the practice of creating goals. With goals, your child will learn to save then spend with purpose, curbing the financially detrimental behavior of impulse buying.

Encourage children to save at least half of all allowance and gift/holiday money they may receive. The “spend half, save half” technique will give them the freedom to make decisions on when to spend and when to save. They could also set a goal of saving a certain amount of money each day or week; they could save $0.50 in loose change every day, reaching $182.50 in a year — even more if the funds are put into a savings account, where dividends will be earned throughout the year.

Track funds and goals
There are a number of ways to track finances and savings goals. One method is to go for an easy approach by creating a wall chart or spreadsheet, including the goal amount, current amount saved and/or smaller weekly achievements over a set time. If you’re feeling crafty, then you could look to Pinterest for ideas on decorative change jars, mixed-media savings charts and other creative ways to make saving up fun and engaging.

Beyond traditional methods, there are a variety of apps and computer programs created for children to help them monitor their savings and reach financial goals. The best and most enticing part is that these apps typically tie in a gaming aspect, creating an educational experience as the child works toward a goal.

Teach the basics of credit
This may seem advanced for some age groups but teaching about credit early on can be a useful tool in preparing a child who will likely have a credit card and/or loans later in life. Simply start by playing games that include some element of lending. From traditional board games like Monopoly to online games offered by your financial institution, there are plenty of ways to create a framework on how lending, collateral and interest work.

You could also teach the basics of credit by lending your child a small sum of money. If there is something he or she wishes to purchase but does not yet have all of the funds to do so, you can use it as an opportunity to show how the repayment process works. This could be by means of weekly/monthly payments or automatic deductions from an allowance. You could even include loan terms, interest rates, late fees or grace periods to make a more realistic experience.

Get them involved
Allow your child to learn by doing: making deposits, withdrawing money and purchasing items. This will not only teach basic money management skills, but it will also give your child a sense of ownership and freedom over earnings. It’s one of the easiest and most important ways to help children learn about money, as it will give them a firsthand experience of what it’s like to handle and make transactions.

Financial education is important at any age, but the more you learn and the sooner you learn it, the better off you will be. Passing this knowledge to your children will teach them important lessons in responsibility and how to make sound decisions. Better yet, it will provide the framework for a successful financial future — for that, you will both be thankful in the years to come. 


Deidre Davis

Deidre Davis is the Vice President of Marketing and Communications at MSU Federal Credit Union. MSUFCU's headquarters are at 3777 West Road East Lansing, MI 48823. Contact Deidre ad or (517) 664-7877.

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