As a parent, it can be difficult to know how and when to approach the subject of finances with your Gen Z kids, but being proactive about teaching them money lessons can help them greatly in the future.
“Teaching your kids about finances from a young age and into adulthood can help them build a healthy relationship with money, and give them a head start on saving and establishing wealth,” said Abby Wendel, president of consumer banking at UMB Bank. “Conversations around saving and investing can ultimately better prepare your kids and teens for financial success, and be better equipped to handle their own money challenges.”
Provide an Allowance
“One of the best ways to teach proper money management is by giving your child an allowance,” said UMB Bank’s Wendel. “The frequency and amount of the allowance matter less than the act of handing over money for the child to control. Use the allowance to spur conversations about planning and priorities.”
Encourage Children To Create Savings Goals
Start tracking your child’s savings and consider using visual aids to assist with teaching them about how saving works.
“Make a savings goal chart and use stickers or drawings to visually demonstrate the amount of money saved each week,” Wendel said. “If your child wants to save up for a specific item, consider adding a picture representing what he or she wants to purchase with the saved funds as a motivation.”
Open a Savings Account
“Having their own independent account may encourage kids to save more money, and it will make them feel more responsible,” Wendel said. “A monthly trip to the bank or ATM where the child personally deposits their new savings and receives a balance slip is positive reinforcement that they are growing their account. Additionally, this repetition will help solidify the importance of stashing away money.”
Teach the Power of Patience
Always providing instant gratification to your children can set them up to take money for granted. Instead, teach them the importance of saving up for what they want over time.
“Sometimes even adults need to be reminded that they may have to wait to buy the things they want,” Wendel said. “Set an example and practice holding off on buying something by making a savings plan that you share with the family. Alternatively, you can create a family goal to strive for, like a group outing or adopting a kitten, with a target savings goal identified.”
Consider Matching Contributions
“Just like some 401(k) retirement plans have employer-matching contributions, consider a parent match for money your child saves,” Wendel said. “Knowing that you will add funds when they do will encourage children to have regular savings habits.”
Focus on Long-Term Saving
“When kids are between 11 and 13 years old, you can begin discussing long-term goals for saving,” Wendel said. “For example, discuss a car-buying goal with your child when he or she reaches pre- or early-teens, and keep him or her involved in the savings process.”
Make Money Talk a Habit
To reinforce lessons on saving and fiscal responsibility, it’s important to make a habit out of discussing money with your kids.
“Talking about finances with your kids will make them more comfortable with money,” Wendel said. “Try to include your kids in family meetings on budgeting, spending and investment strategies. Every time your child gets money, encourage them to save, spend, invest and give. This will lay a healthy foundational relationship with money and help your kid understand how to manage money. It’s also important to talk about investing as a long-term game.”
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