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Teaching kids about money

How military families can instill good habits in their children

It's never too early to instill good financial habits in children. Stock photo.

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Connor Lewis has two boys under eight years of age, but he's already teaching them about money, credit, and more. That may come easily to the Vice President of Talent Management and Development at Harborstone Credit Union, however, Lewis believes it is never too early to start instilling good financial habits in our children. 

"Some of our highest highs and lowest lows come from our finances, so a strong understanding of everyday money management and credit management is a critical foundation to a happy life," Lewis said. 

He pointed to two important bullet points. One, paying yourself first. "We've all seen the impact (during COVID) of not having an emergency savings." It's important to pay yourself first by tucking away emergency resources. Second, money management is an everyday choice. "The more we know about where we spend our money, the better prepared we are," Lewis said. Spending plans, not budget restrictions, is the right frame of mind, he added. We should empower ourselves to spend our money on what we want, and that starts with knowing where it is going now. 

Kids can grasp these concepts. Lewis, who has worked at Harborstone Credit Union for two years, explained that early skills that will help them avoid pitfalls such as too much debt and high credit card payments when they are adults. 

Lewis said his kids each have a minor savings account at Harborstone. He monetizes their chores and pays them out after they've contributed 10% to emergency savings, and when they reach their savings goal with the other 90%, they can have it. This shows them that a savings plan coupled with a reward goes a long way. 

He has also taught them about credit using M&M candies. He's demonstrated how borrowing five M&Ms to eat now results in not only having to pay back those five, but also an interest payment of more candy. 

"Kids can really understand that concept," he added. Lewis recommends parents check out Junior Achievement's website for resources at specifically the money curriculum. Harborstone is a partner with JA. Parents that discuss money management with their children also lessen the common taboos around money.  

Here are seven money management tips to get you and your child started:

  1. Be open about your family's monthly income and expenses. Your child probably has no concept of basic living expenses. Share actual facts and figures with your kids to show how you prioritize your spending between "needs" and "wants."
  2. Help them get a bank account. Once your child has a job and is receiving a regular paycheck, it's time to open a checking account. Talk to them about picking a bank, discuss the responsibility of having a debit card, and show them how to use online banking tools to check their account balance regularly.
  3. Review monthly statements together. Your teen may not realize they're spending $50 a month on junk food, but those $1.50 purchases can really add up. A review of monthly statements can be a great way to point out spending patterns and discuss money management.
  4. Show the impact of savings. If there's something your child wants to buy, whether it's something small like toys, or big like a car, sit down and make a savings plan together. Figure out what amount they'll need to save over how many months to reach their goal.
  5. Discuss how to make smart purchases. Even if your child knows exactly what they want, show them how to do a cost comparison, read product research, and check consumer reports. They might find that another choice is a better value.
  6. Start out with small monthly expenses. Giving your child a little financial responsibility each month can help create purposeful spending habits that will serve them well later in life. Whether it's candy, their cell phone, or even just the monthly Netflix subscription, this can be a great teaching tool.
  7. Teach your child about the rewards and dangers of credit cards. To an unprepared child, their first credit card can feel like a license to spend. Help them to understand the advantages of building good credit while also explaining the risks of acquiring credit card debt.

Remember that this is a learning process full of teachable moments and, inevitably, a few setbacks. Budgeting isn't easy. Lead by example, help them practice, and watch them transform into budget-conscious adults. 

Harborstone does this with first time airmen at McChord Field, too. Lewis said that employees participate in a monthly talk with all airmen new to the service since many are away from home for the first time and are now receiving a decent income and/or bonus. This proves we are never too old to learn good money skills.


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