Simple ways for parents to encourage financial fitness with their children

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Print this page Kristin L. White, CPA, Wells, Coleman & Company LLP

When I was a child, my parents believed it was important for me to have an understanding of basic banking and personal finances. My mom worked for a bank and saw, on a daily basis, the consequences of people’s poor financial decisions. Students entering ninth grade this school year in Virginia schools are now required to take a one-credit course in economics and personal finance before graduation, an initiative the Virginia Society of Certified Public Accountants (VSCPA) strongly supported. However, there are some things that parents can do with their children before their high school years to encourage financial fitness.

Take the piggy bank to the real bank

Probably the easiest way to show children the value of savings is through the piggy bank. This can be the traditional pig-shaped coin bank, a coin bank or a simple plastic jar that used to hold peanut butter or mayonnaise. Having a clear container can allow children to see their savings grow and keep them encouraged. Once coins and cash reach a certain level in the piggy bank, those funds can then be taken to the traditional bank. Many banks have special savings accounts for children that carry no fees and no minimum balances. Giving children the experience of working with bank personnel and opening their first savings account will make them more comfortable and knowledgeable when they open their first checking account.

Develop a spending plan for children

As part of establishing an allowance, parents can sit down with their children and decide how monies will be spent, similar to a traditional family budget. A simple spreadsheet can be used to show each month’s allowance money and the plan to spend the money to include toys, video games, savings, or charitable contributions.  This will allow children to visualize how long it will take for them to save up for that special toy or game and learn the basics of budgeting in an interactive way. The budget can also include expected cash gifts for birthdays, holidays or report cards. Parents who prefer to not give their children allowance money can create a “mini” budget, or spending plan each time their children receive cash gifts.

Let children be family budget monitors

Parents can get their children involved in the family budget by allowing them to be the monthly budget monitor for a specific expense category. The expense category should be something that the children benefit from, such as dining out, family entertainment or outings, or groceries. Parents can share the monthly budget amount for the expense category and have their children keep track of expenses that fall into the category. Children can see how much is left to spend after each individual expense has been applied. Parents can create a graph or chart to show how much has been spent compared to the monthly budget amount. This can also be an opportunity for parents to teach children how to use a simple calculator. Children will gain an understanding of typical family finances, including family financial decisions.

Price the holiday wish list

Most holiday wish lists for children consist of every toy or video game they see on television during Saturday morning cartoons. However, most children don’t realize that everything on their list comes with a price tag. After children have made out their holiday wish list, parents can take their children to the toy store and have them write down the cost of each wish list item. Then, parents can discuss with their children how much they plan to spend on wish list items and work with their children on deciding which items will fit into the holiday budget. The same strategy can be used for birthdays or other special occasions. This can help children understand the value of making tough financial decisions.

Be a financial adviser

One of the hardest aspects for parents in teaching their children financial basics is to allow their children to make financial mistakes. When a child sees a toy they think they have to have at a store, parents can advise their child on the financial implications of purchasing the toy as it relates to a planned savings or spending plan. However, allowing the child to purchase the “at the moment” toy can later teach the child that their past financial decisions can have an impact on current and future decisions. Once the child loses interest in the “at the moment” toy and remembers a special toy or video game that they have been saving to purchase, they realize that it will now take a little longer to save to buy the item. Children often learn by making mistakes, and it is better for children to learn the consequences of their financial decisions early than when they are older and those financial decisions have a greater impact on their lives. 

Even though I didn’t always like what my mom had to say regarding personal finances and how I should spend my money, she was essentially my first financial adviser. It was her influence and interest that eventually led to me pursuing a career in accounting.

For more information regarding personal finances, budgeting, and resources for parents, please visit http://www.financialfitness.org


Kristin L. White, CPA, is a senior staff accountant with Wells, Coleman & Company LLP in Richmond.  She is an active member in the Virginia Society of Certified Public Accountants and the co-chairperson of the Young CPA Committee of the Richmond Chapter of the Virginia Society of Certified Public Accountants. 

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