As a parent, you play a vital role in educating your children. Even if you are not a parent, you may have children in your life you want to support. As children grow, financial education becomes as important as lessons in English, math and social studies. Helping young people establish good money management habits early will help them to become financially responsible adults; the more they learn and the sooner they learn it, the better off they will ultimately be.
Passing financial knowledge on to young people will teach them important lessons in responsibility and how to make sound financial decisions. Here are some ways to start.
If the young person in your life 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 savings goals.
For example, you can encourage children to save at least half of the allowance and gift money they receive. They could also set a goal of saving a certain amount of money each day or week. For instance, they could save 50 cents in loose change every day, reaching $182.50 in a year – or even more by putting the funds into a savings account, where dividends will be earned throughout the year.
Learn by doing
A great way to emphasize new skills is to put them into practice. Allow young people to make deposits, withdraw money and purchase items using funds in their accounts. This will not only teach basic money management skills but will also give them a sense of ownership and control over their earnings.
You could also teach the basics of credit by lending a young person a small amount 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 this as an opportunity to show how the repayment process works by setting up weekly or monthly payments or automatic deductions from an allowance. To make this experience even more realistic, you could include loan terms, interest rates, late fees and/or grace periods.
Michigan State University Federal Credit Union offers youth accounts that provide the tools and resources to start the savings process and make learning financial basics fun and interactive. There are five youth
- Sweet Pea (0-2 years)
- Dollar Dog (3-6 years)
- Cyber Saver (7-10 years)
- Money Club (11-13 years)
- CU Succeed (14-17 years)
After opening a youth account, members will receive a free gift, can participate in contests and special events, and enjoy access to free gaming apps. In addition, all youth account members will receive one virtual coin for every $10 deposited into their accounts. They can then redeem these coins for items in the Youth Store at ComputerLine, MSUFCU’s online banking system. For more information, visit msufcu.org or stop by a branch today.