JERSEY CITY – School is out and students are ready to ditch the books and enjoy the long summer days. However, the summer months can be an ideal time to educate children and teenagers about an important lesson not often taught during the school year – financial responsibility.
Whether you’re shopping for summer clothes, planning a vacation or just spending free time with children, summer break presents a unique opportunity to teach children about money and responsible decision-making.
“Summer break is a great time to start offering kids a weekly allowance and introducing them to the concept of managing money,” said Chris Martin, chairman, president and CEO of The Provident Bank. “Children learn how to save for what they want and decide how much they want to spend, which helps them better understand the costs associated with their summer activities.”
With children spending more time at home, parents have opportunities to talk openly with them about money and communicate their personal values and experiences. Parents can work through stages of financial responsibility with their kids, including the importance of budgeting.
“Though the school year is over, the summer is an opportunity for kids to learn and make decisions about money – whether they’re earning, spending or saving. By teaching children early on how to manage money, we can help shape their spending and saving habits so they can make sound financial decisions in the future,” said Martin.
Here are seven simple ways to educate children over summer break about personal finance and the importance of money management:
1. Give an Allowance
The summer months provide opportunities for kids to make their own choices about what to do with money. Receiving a “paycheck” for helping with household chores not only instills a good work ethic, it helps kids form a mental budget about how much of their own money they want to spend. A disposable income can also open the door to personal finance lessons, like saving and spending.
2. Consider a Summer Job
If your kids are old enough, help them find a part-time job. The experience will instill a greater appreciation for and value of the dollar, and give kids a chance to learn other responsibilities and job functions.
3. Set financial goals
Before taking a summer vacation, explain to your child that they will need to bring their own spending money for souvenirs. Encourage them to save some of their allowance for the trip, and offer to match their savings.
4. Be Charitable
The next time your young children have a lemonade stand on a hot summer day, suggest they set aside a portion for a charitable cause of their choice. It will not only help them manage money, it will make them feel good about helping others. Kids also can donate old clothes, toys and even their time.
5. Create a sense of responsibility
Once you provide your children with money through an allowance, or they earn it from a summer job, they should have the freedom to decide what to do with it. To help children understand their needs versus wants, have them make a list of activities they’d like to do this summer or things they’d like to purchase, and discuss it together.
6. Set up for Savings
It’s important that kids learn the importance of saving. This summer, consider setting up a bank account for your child. A child as young as 10 years old can – and should – have a bank account to learn the importance of saving, learn the basics of earning interest, writing checks, and gain a sense of financial responsibility.
7. Explain the plastic cards
As you shop for summer clothes, groceries for barbeques and other items, explain to children the difference between credit and debit cards and the costs associated with them. Learning to deal with money, as opposed to credit, is useful in understanding responsible money management. Credit cards can be especially dangerous for college students who are easy prey to credit card companies. Debit cards are good alternatives because the amount of a purchase is deducted immediately from a bank account and they work at ATM machines. Provident offers this service to anyone age 18 or over at no additional charge.
Photo credit: Tracy Olson
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