Parents often say that their children don't understand the real value of money. And often they're right. But once you've identified the problem, the next challenge is teaching kids the rules of responsible money management
One approach is to have your children participate in paying for the toys, games, or other things they want. You could open a savings account “in trust for” the child and put money into it on a regular basis to save for their goals. Erin Baehr, president of Baehr Financial in Stroudsburg, Pennsylvania, explains, “You may want to help them set some shorter-term goals, like putting away a dollar a week and at the end of six months being able to buy something special with it.” Baehr also suggests building a routine for what your children do with money when they receive it. “You might have them divide up their allowance, saying this is for later, this is for now, this is to give away to charity. . . . You definitely want them to learn that they don't want to spend everything all at once.”
It can also be a good idea to involve kids in family discussions about money, such as the family budget, how purchase decisions are made, and how you sometimes have to wait to afford something. That can provide children with the practical sense that money doesn't grow on trees. You might use family shopping trips as learning experiences to show children what their favorite items cost. Try to teach kids about how to make their dollars go further by watching for sales and coupons and avoiding impulse buying. Altogether, such actions can help your kids learn about budgeting their money and setting priorities for how they use it.
Although children typically don't have large amounts of money, you may want to open a savings account with your child and start teaching about saving and the power of compounding interest. The Ally Bank Online Savings Account has no monthly maintenance fees, and you can open and fund an account with any amount.Learn more about how Ally Bank can help your family make smart money decisions at Ally.com or call live, 24/7 customer support at 877-247-ALLY (2559) today.