Financial literacy is one of the most valuable skills you can teach a child. By introducing smart money habits early, you can set a child up for a lifetime of financial success. In honor of Financial Literacy month, here are some tips from FNBMD to help you start building strong financial foundations for kids at any age.
1. Lead by example
Children learn by watching their parents. If they see you budgeting, saving, and making thoughtful spending decisions, they’ll be more likely to develop those habits themselves. Talk openly about money, explain why you save, and demonstrate responsible spending.
2. Introduce the concept of earning money
Give kids opportunities to earn their own money so they understand that money is a result of work. You can pay them for age-appropriate chores, encourage money-making activities like lemonade stands or pet-sitting, and help older kids find part-time jobs. This teaches them the value of work and the satisfaction of earning money.
3. Teach them to budget with an allowance
If you give your child an allowance – or if they are earning income from other sources – it’s time to teach budgeting. Encourage them to divide their money into categories:
- Save – A portion should go toward future goals (such as a toy or game they want).
- Spend – Allow them to make spending choices within reason.
- Give – Encourage generosity by setting aside money for charity or gifts.
Using jars, envelopes, or separate bank accounts (for older children) can help visually reinforce this system.
4. Open a savings account early
Bring your child to the bank and open a savings account in their name. Show them how deposits work and let them watch their balance grow over time. Many community banks like FNBMD offer kid-friendly savings programs.
5. Teach smart spending choices
When your child wants to make a purchase, encourage them to compare prices and think about whether it’s worth the money. Help them understand concepts like Needs vs. Wants, Delayed Gratification, or Opportunity Cost (choosing between two items if they can only afford one).
6. Explain the basics of credit and debt
Older kids should learn how borrowing works before they get their first credit card. Explain interest, the importance of paying off balances, and the risks of debt. A great way to start is by letting them borrow small amounts from you with a repayment plan.
7. Encourage goal setting
Help kids set short-term and long-term savings goals. Whether they’re saving for a new toy or their first car, having a goal makes saving feel more rewarding.
8. Use real-life learning opportunities
Everyday activities provide great teaching moments. For example, grocery shopping teaches price comparison and budgeting, planning a family vacation introduces the idea of saving for big expenses, and checking a restaurant bill helps with basic math and tipping.
Teaching kids about money doesn’t have to be complicated—it just takes consistency and real-world practice. By introducing these smart money habits early, you help your child develop lifelong financial skills that will serve them well into adulthood.
And, we’ve got your back. FNBMD can be a great resource for helping kids learn about saving and money management. Stop by and explore our youth savings programs to get them started on the right financial path!