It’s never too early to teach your school-age children about money. Some experts say even kids in preschool can learn some of the basics.

But setting a good example might be the best teacher. First explain what money is and how it works. It’s not just free at the ATM!

Then let your children see you planning a budget, paying bills and saving for a family vacation. If they see you making good decisions, they likely will do the same.

Here are other tips for raising smart money managers:

Grade school

When your child realizes that money can buy things they want, give them an allowance. It’s not just to pay them for doing chores. Have your child divide those funds into savings, giving and spending and begin to manage those pots. Start with 50 cents to a dollar a week for their age (7 years old, $7) and increase it as they age. Make sure it’s what you can afford, too.

Show them how much things cost. If that toy car they want costs $5, have them take their own money out of their stash to take to the store and pay for that item. Seeing that empty money jar might change their mind. You also can give them the opportunity to earn extra cash if it’s beyond their means. Cleaning the basement can be worth more than taking out the trash.

Make sure they have a place to keep their money. It will help them keep better track of where it is, where it goes and how fast it grows. Once those funds reach a certain level, consider opening a bank account in their name. If they are saving for something, have them place a picture of the item near their home bank. It will help to keep them on track.

Teens

Now’s the time to teach them how to survive on their own. Help them figure out how they spend their money and make a budget. That will give them a plan and a picture of where the money is going every month. Let them set their own priorities, just like an adult.

Talk to them about setting long-term goals. That might be buying a car, attending a special concert or saving for college. Work that into their budget and help them figure out just how long it will take if they save only so much each month. Goal setting teaches them patience and vision.

Instead of buying their gas, clothing and other basics as needed, give them a certain amount a few times a year and let them know they are in charge of making it last until the next payout. That helps them to resist the urge of impulse spending.

Teach them to pay themselves first. Every time they get funds from babysitting, or their allowance or a gift, a portion should first be put in savings for future use. That will help them learn early to make their money work for them.

Educate your kids about how insurance works, how to avoid getting too far in debt by overusing a credit card and even planting the idea of saving for retirement. Explain the joys of compound earnings.

College

It’s easy to get approved for a credit card as a college student. Paying off the balance every month is much harder. Make sure your college student understands that interest is charged and how easily debt can spiral out of control. Don’t co-sign for a credit card. A better idea might be a debit card, with specific guidelines on how to use it. Opt out of the overdraft protection, too.

Make sure your student knows exactly what you’ll be paying for. That might be tuition and room and board with your child responsible for books. Don’t pay for everything. You want them to learn how to manage their expenses in this new stage.

That first month of school, have your child track their expenses, no matter how small. That will give them an idea of how much they are spending and how much they will need in the future. After they have a semester under their belt, they might need to consider getting a part-time job to pay for those expenses.

Has your son or daughter taken a personal finance course? This might be the perfect time. Understanding the basics will help them determine whether to take out another student loan and just how long it will take to pay it off after college. Student loan debt has become a major crisis, and a few cost-cutting measures now could prevent financial pain in the future.

Look for easy ways to cut costs. A student who lives close to campus or on campus could go without a car, saving on a car payment, gas and insurance. Check out the amenities on campus. Many times a student will find a gym, movie nights or social events for free. The bonus is that they’ll meet more new people.

One of the smartest things your children can do financially in college is graduate in four years. Instead of spending more money on student loans, etc., they’ll hopefully be in the workforce, realizing their dreams. Make sure they’re taking advantage of free education money in scholarships, grants, refunds and tax breaks.

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This article originally appeared in the November 2019 issue of the Momaha Magazine.

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Marjie is a writer for The World-Herald’s special sections and specialty publications, including Inspired Living Omaha, Wedding Essentials and Momaha Magazine. Follow her on Twitter @mduceyOWH. Phone: 402-444-1034.

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