Raising Money-Smart Kids

• Discuss your job with your child. Talk about how when you go to work, you’re getting paid for the hours you’re there and the work you do.
• Talk about other people in their lives that work to earn money – like a babysitter or store employee. Walk/drive through your neighborhood or town and ask them to point out other people they think are working to earn money.
• Explain how some people choose to start their own business to make money.
• Ask your child to think of ways they can earn money.

• Work with your child to set a short-term financial goal. Keep the time frame short — within a couple of weeks. Ask them what they’d like to accomplish and how they plan to do so. Draw a picture of the goal together and put it somewhere they can see it every day. Work with them to accomplish the goal.
• Find a jar or can, and label it for saving. Suggest your child put some of the money they get into the saving jar, so they can buy a toy or treat when they’ve saved enough.

• Grab some loose coins and work on sorting them. Talk with your child about the differences between the coins – not just in size, but in value.
• Make a list of free activities your child enjoys, such as playing with a friend or going to the library.
• Discuss how you use money to buy things. While you’re out shopping, have them point out things that cost money. Depending on their age, ask them to identify the cost of the item they’ve picked.

• Begin talking about needs and wants. Talk about needs as the very basic items you must have to survive – like your house or food and water. Ask them to identify other needs.
• When you’re out shopping, point out essentials, such as food and clothing, and ask your child to describe items that they may want but are optional.
• Have your child help you with the grocery list. Work on the needs first and then put down the wants. Then, explain there’s a set amount of money to purchase everything. After purchasing the needs, there may or may not be enough to purchase the wants on the list.
• Think out loud about your budget and how you mentally divide up a finite amount of money into sections for food, rent or house payments, clothes, and optional items.

• Discuss how people make choices on how they earn money. For example, some people work for others or companies while some work for themselves.
• Consider an allowance. Giving a child an allowance is a personal family decision. Read more about the pros, cons, and types of allowances here.
• If your child receives money as a gift, talk with them about the options for what they can do with it.
• If your child brings up their friends and peers, use it as an opportunity to talk about how each family’s financial situation and priorities are different.

• Encourage your child to save at least 10% of everything they earn. Ideally, they’d save more, but 10% is a good start. Have them write out their savings rule and have it displayed where they can see it regularly.
• After their savings accumulates, visit the credit union to make deposits. Show them how their money has grown over time.
• Have them set a goal for something they want to purchase. Together, create a plan on how they’re going to reach their goal. Make sure the goal is SMART: Specific, Measurable, Attainable, Realistic, and Time-Bound.
• Discuss reasons to save and have your child pick the ones that resonate best with them. Ideas include: to have the freedom to make choices, to have funds during downturns, and to feel financially secure.
• Consider a “matching plan” for your child’s savings: You put in 25 cents per dollar saved. Encourage your child to draw, make a chart, or tell a story about how this helps their money grow.

• If you haven’t already, visit an A+FCU branch together to open a Youth Membership Savings Account. Have your child go through the account opening process and encourage them to ask questions. Ask the Member Services Officer to explain how the savings account works and how interest works.
• Have the Member Services Officer talk about how money in savings accounts is safe and protected.
• Once the savings account is established, encourage them to make deposits to their account regularly. Help them track their balance and show them the interest that they earn.

• Ask your child to set a goal for something they want to do or buy and talk about the steps it would take to get it. Over time, check in to see how the steps are going and whether that goal is still important.
• Share your own tips and strategies for how you make plans and get yourself to stick to them.
• Practice making a list before you go to a store or on a shopping trip. Talk about how easy or hard it is to stick to the list.

• When out shopping, include your child in small money decisions, like which kind of cereal or fruit to buy. Show them how you make your decision by explaining the differences in cost and quality.
• Give your child a small amount of money ($2-$3) and with it the freedom to purchase something – you can narrow it down to a certain type of item. Explain that they can choose what to buy, but can’t go over the amount you gave them.
• While shopping with your child, go through your decision-making process with them. Ask yourself questions aloud like, “Do I need this?” or “Would it cost less somewhere else?” Explain your answers.

• Comparison shop for a particular item your child wants. Together, look at prices online and in store. Don’t forget to talk about other costs, like shipping and taxes. Ask them which is the best deal and why.
• Have your child help you find coupons. When you use the coupons in stores, explain how they help you save money. Use the receipt and show them how much you saved.
• Bonus: if they help you find coupons, allow them to keep part of the savings.

• Talk with them about how online offers that appear to be “free” can be scams to get them to unknowingly spend money.
• Remind them to think twice before buying. If something is too good to be true or is too easy to purchase, take a moment to step back and evaluate.
• Discuss advertising and that the goal is to try and get you to spend more money but that the decision to spend is ultimately up to them.

• Talk about credit cards and the dangers of buying something you can’t afford. While compound interest is great for saving, it’s not so great when it comes to debt.
• Discuss the advantages of a credit card, especially for making purchases online, and how when it’s used smartly, a credit card can be a good way to build credit.
• Drive home this rule: if you use a credit card, aim to pay it back in full each month. Otherwise, you could pay more due to interest charges.
  To show how much and how long it would take to pay a $1,000 credit card balance making only the minimum payment, use our calculator.
• Talk about the differences between smart and dangerous borrowing. Examples of smart borrowing could include getting a mortgage to buy a home or even borrowing money to go to college. Examples of dangerous borrowing include store credit cards or maxing out a credit card knowing you can’t afford to pay it off in full.

• Always know the websites your child visits and block those you don’t want them on.
• Talk about the dangers of giving out personal information online, like their birthdate, address, phone number, email, or school. Explain there are people who’ll use this information to do bad things.
• Don’t allow them to buy anything online without your permission, and be careful with apps on phones. Many of them have in-app purchases, making it easy for kids to buy things.

• Use your teen’s first job as an opportunity to discuss the difference between gross income and net income. Go through their first paystub and show them the money that was taken out for Federal Income Taxes, Social Security, Medicare, and more.
• Discuss how taxes are used – national defense/security, schools, roads, medical help for the elderly, etc.
• When it comes time to file taxes, show them their W-2 and go over what each of the numbers mean.
• Money can also be taken out of their paycheck to pay for things like employee benefits, retirement, and more.

• Talk about what compound interest is and how it helps your money grow. Use examples and calculators to show how it works.
• In the example below, Ted and Mary are saving money for retirement. Ted saves $2,000 each year beginning from age 18 to 27 in an account paying 7% APY. Overall, he saves $20,000 in ten years. Mary begins saving at age 35 and also saves $2,000 each year until age 65. She saved $70,000 in 30 years. However, because of compound interest, and despite Mary saving an additional $50,000, Ted has over $90,000 more than Mary!

*APY=Annual Percentage Yield.

Investments are assumed to be made annually and at the beginning of the investment period. Balance amounts are rounded to the nearest dollar and are not adjusted for inflation.

• Once your teen has a job/starts earning income, talk with them about ‘paying yourself first’ – putting money into savings before spending anything. Encourage them to set a savings rule (for example, saving at least 10% of everything they earn) and set up automatic transfers if possible.
• Explain that it’s important to have money set aside for emergencies – typically 3-9 months’ worth of living expenses.

• Talk about long-term financial goals, such as buying a home and retirement. Encourage them to begin saving money for a long-term goal.
• Discuss savings options, like a Roth IRA, and how they can help them save for long-term goals through compounding.
• Explain that companies sometimes offer other types of retirement accounts, like a 401(k), to help employees save for retirement. These tools can help them set money aside in a special account that should only be used for retirement.

• Discuss the financial benefits of continuing education after high school. Explain that while college or technical school might cost money up front, the long-term earning potential for those with a degree is typically higher than those with a high school diploma.
• As they begin to research schools to attend, encourage them to look at tuition, fees, room and board, and other costs in addition to what the school offers. Use tools like the Net Price Calculator to research prices and compare schools.
• Go through the FAFSA process before your teen is a senior using the FAFSA4Caster. Together, follow the steps to see an estimate of your teen’s financial aid. Use this information and the net price information to get a better idea of what continuing education will cost.
• Research types of financial aid – including loans, grants, work-study, and scholarships – on the U.S. Department of Education website.

• Work with your teen to develop a budget. Have them list their income and their expenses, then track their spending for a month. Explain how planning ahead, having a budget, and setting goals can keep them from overspending or needing to use a credit card to buy something they can’t afford.
• Reinforce this rule: only use credit to buy things you can purchase with cash. Never buy more than you can afford so you can pay the balance off right away.

• Educate your teen on the cost of credit and how borrowing money can be risky if you can’t pay it back.
• Talk about how having good or bad credit can impact things like getting an apartment, getting a job, or even being able to buy a cell phone.
• Explain that a credit report is like a financial report card and is important to check frequently to catch errors and misreported information. If a credit report is a financial report card, their credit score is their financial GPA and should also be monitored.
• If you feel comfortable, consider getting a low-limit credit card for your teen to use on a regularly occurring expense, such as gas. Walk them through the process of reviewing options, filling out the application, and the terms offered. Then, every month, have them pay off the balance in full. This can help them build credit while not incurring any debt.

• Reinforce previous lessons on the dangers of entering personal information online. Use a personal story about someone who had their information stolen or had a fraudulent purchase made with their information.
• Talk about the dangers in free offers found on the internet and how thieves and fraudsters use these kinds of ploys to get information and scam people into spending money.

• Talk about how insurance can help you protect things that are expensive or even impossible to repair/replace. Ask them to think of things that might need insurance.
• Remind your teen that like anything else, they should comparison shop when it comes to purchasing insurance.
• If you don’t feel comfortable talking about insurance, see if your insurance agent would be open to going over key terms, like deductible, coverage, etc.

Videos:

• Demystifying Mortgages: Get to know how mortgages work and learn about key terms like ‘fixed-rate’ and ‘adjustable-rate mortgages’, ‘annual percentage rates’, ‘principal’, ‘interest’, and ‘amortization.
• Leasing vs. Buying A New Car: Get to know your financing options and the different ways to pay for a new vehicle to make an informed purchase decision.
• Loan Basics: Get an introduction to loan types and key terms before tackling more advanced lending topics.
• Owning vs. Renting A Home: Learn about the key differences between buying and renting a home to decide which option best suits you.
• Predatory Lending: Learn about payday lenders, check cashers, pawnshops, and other high-cost alternative financial services providers to identify abusive or unfair lending practices.
• Student Loans 101: Learn about the differences between federal and private student loans and things to consider before signing on the dotted line.
• Strategies For Debt Repayment: Learn about the three approaches to building a debt repayment plan: the Snowball Method, the Avalanche Method, and Consolidation.

Videos:

• Boost Your Credit Score: Get tips on how to maintain a healthy credit score and see how your credit report can be a useful financial tool.
• Breakdown Of A Credit Score: Take the mystery out of credit scores with this video that shows how credit scores are calculated and why they’re important.
• Comparing Cards: Compare and contrast debit cards, credit cards, and prepaid debit cards, and make informed decisions when it comes to your preferred payment method.
• Using Your Credit Card: Learn about concepts – including billing cycles, payment due dates, and credit card statements – and better understand the reason to pay in full and on time each time.

Videos:

• 7 Cooperative Principles: Dive deep into credit union history and the guiding principles that make credit unions unique.
• Choosing Your Financial Institution: The very first financial decision you’ll make is also one of the most important choices – where to keep your money.
• Credit Union Myths: Learn about four common misconceptions surrounding credit unions.
• Growing Your Money Locally: Find out about the importance of supporting the local economy.

Videos:

• Don’t Rush Into A Loan
• How Much Should I Borrow?
• Looking At Loans

Videos:

• Give Every Dollar A Job
• Save For Emergencies
• Watch Out For Sneaky Expenses

Videos:

• Leave Some Room
• Pay In Full On Time
• Review Your Statement

Videos:

• How Is My Credit Score Calculated?
• What Is A Credit Score?
• Why Do I Have A Credit Score?

Videos:

• Debt Consolidation
• Don’t Give Up On Your Debt
• Snowball vs. Avalanche

Videos:

• Concentration Risk
• Dollar Cost Averaging
• Invest Early