By Peggy Jo Goodfellow, Arizona Farm Bureau: Teaching children to manage resources is one of the most important legacies we can provide. Anyone who has raised children can tell you that it is an on-going process - not something taught in one or two easy lessons. Managing money is a continual learning process even for adults. Fortunately Farm Bureau members have easy access to Farm Bureau Financial Services agents who are trained to help you achieve your financial goals.
As a parent you may feel a little uneasy about teaching your children about money. After all, you may not be all that confident about your own money-management skills. You probably know more than you think you do, and you will play a critical role in shaping your children’s attitude toward money.
Being a parent myself, I started as soon as my children could distinguish between coins. Here are a few ideas to teach children about money at various stages of childhood.
- Toddlers and Preschoolers: At this age, children can sort coins, learn their value and begin to understand how money gets converted into ‘things.’
- 5-7 Year Olds: By the time children start school, many are ready to receive an allowance. Experts agree that an allowance should not be linked to chores or grades. Extra money can be earned by doing special jobs such as cleaning the garage or patio.
To encourage our children to save we divided their allowance among three jars. The money in Jar 1 could be spent on whatever they wanted; Jar 2 money saved for a more expensive item like a toy or book; Jar 3 was for long-term savings such as a college fund.
- 8-10 Year Olds: At this age, it’s time to make a trip to the bank to open a savings account. Let your child complete the deposit slip and explain that the bank will pay interest. Children are fascinated when money makes money. Involve your children in family spending decisions. Explaining how you didn’t buy the fancy sports car in exchange for a sedan and a family trip can teach about trade-offs and family values.
- 11-13 Year Olds: If your child has earned income from a paper route, mowing lawns or baby-sitting they can set up a Roth IRA that will accumulate a tax-free retirement nest egg. A $1,000 investment at age 12 can grow to over $150,000 at age 65.
To learn more, ask your Farm Bureau Financial Services agent for savings and investment ideas.Join our Family!