Back-to-school season offers an opportunity to educate students about an important lesson not often taught in the classroom – money management.
“Shopping for new pencils, backpacks and notebooks is exciting for children. Because they have an interest in the things they are purchasing, it’s a great time to educate children about financial responsibility,” said Chris Martin, president and CEO of The Provident Bank.
Starting with lessons about how to make change, parents can work through many stages of money management with their kids, including budgeting as well as handling allowances, savings accounts, checking accounts and eventually even investments.
“It’s about helping children understand the costs associated with their activities and teaching them the value of spending and saving wisely,” said Martin.
As back-to-school items add up, parents can teach children how to manage money with these six money lessons from Provident:
1. Start early
Research has shown that kids learn attitudes about money at any early age. Therefore, as soon as your child can count, introduce them to money. Begin teaching the value of dollars and cents by using regular shopping trips as opportunities to teach children the value of money.
2. Be a good example
Children do watch our example, so it’s important to be careful of your spending behavior. To help them learn to be smart with money, set good examples that sink, such as “I’m going to wait for the sale.”
3. Make a list and check it twice
Once you provide your children with money through an allowance or for doing chores around the house, give them the freedom to decide what to do with it. Help them create and prioritize a list for the upcoming school year based on a budget. It’s a good opportunity to go over which new items they want versus items they need and discuss it together.
4. Bargain shop together
Get your kids involved in checking out those penny saver ads! Have them clip out coupons for school supplies and compare prices. While shopping, choose an item that has price variations and point out the differences. This will help children get into the habit of being mindful of how to spend money.
5. Encourage savings
A child as young as 10 years old can and should have a bank account to gain a sense of financial responsibility and learn the basics of making deposits and earning interest. When giving children allowances, distribute it in quantities that encourage saving. For example, if the amount is $10, give them 10 one-dollar bills and encourage that at least $1 be set aside in savings. Banks like Provident offers savings accounts at no additional charge.
6. Set goals and spending limits
The key to success in teaching your child about money is establishing spending limits and sticking to them. Certain back-to-school items children ask parents to buy them can become a goal to work toward. Goal-setting helps children learn to become smart spenders.
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