5 financial things you need to do before your kid’s 10th birthday (or ASAP if they’re 11)
In addition to providing for your child’s mental, emotional, and physical well-being, it’s also important to invest in their overall financial health as well. While teaching your child money smarts may not seem like the biggest deal right now, instructing kids on good money habits early can help them live more financially empowered lives in adulthood. Below are five financial must-do’s to accomplish before a kid’s 10th birthday…. or you know, ASAP.
1. Talk openly about family finances
Sadly, basic financial literacy and money management classes aren’t offered in schools, which means most kids will learn about dollars and cents at home. This begins with having open, honest, and simple money conversations with your children. Start small, by teaching them about the value of currency and discussing the cost of small items, and eventually work up into talking about the distinction between larger “wants and needs.” As they get older, involve children in small financial decisions.
2. Set up a College Savings Plan
With two-thirds of children graduating with student loan debt, one of the biggest financial boosts you can give your kids is to assist in paying for college. There are a variety of ways to do this, from a standard savings account to a 529 account.
A 529 account is a state-sponsored, tax-advantaged investment account for college savings which allows parents to put money into mutual funds and make tax-free withdrawals exclusively for educational expenses. If a 529 account seems complicated, setting aside money every week for college is easy with Goalsetter. Even sweeter, Goalsetter allows friends and family to easily contribute to college funds on birthdays, holidays, and other gift-giving moments instead of gifting your child physical presents they’ll quickly outgrow.
So if investing is intimidating, now you can have a college fund for your kid just by clicking “sign up with Facebook.” Easy-peasy.
The important thing is to save early and save often, doesn’t matter how you go about it!
3. Give them an Allowance.
There’s no better way to truly teach kids how far a dollar can (or can’t) go than giving them an allowance of their own. Better still, give children an allowance in exchange for weekly chores or helping out around the house. How much should you give? Most experts recommend starting with a $1 per week for every year of age, so an eight-year-old would get $8 a week.
4. Set up Their Own Savings Account
In addition to the savings account you have for your household and the account specifically for your child’s education, your kid needs to have a savings account of their own. The savings account can be for a variety of goals: their personal contributions to college, or saving for larger items like high-dollar video games or school trips. (Or gulp…a car!)
5. Teach Them How to Save Up for a Large Purchase
Notice we said “teach,” not “financially help.”
Assist your kid in setting up their first goal in GoalSetter. Then, schedule a date with your child to sit down and brainstorm all the ways they can save for what they want. Ideate through ways to earn more money, and help them see the math and timeline of what saving a set amount each week can accomplish. Your child may need help seeing this “bigger picture,” but once they’ve done it a few times, they’ll likely be able to financially goal set all on their own.
photo credit: lifeinbetween.me