![]() ![]() At the same time, responsible use of credit will help your child build a good credit history and score. The decisions a young adult makes around debt can have lasting effects well into adulthood. And if your child goes to college, they may need to take out federal or private student loans. There are personal and car loans, of course, as well as new apps that offer installment loans on online purchases and “early wage” payday advances. With today’s financial technology, credit cards aren’t the only kind of debt your new 18-year-old will be offered. Isn’t it more fun to get free money than to give it to someone else?” If you don’t pay all of your balance when it’s due, you’ll have to pay interest to the credit card company, just like the bank pays you interest for your savings account. I’m going to pay back my credit card with cash from my checking account. A credit card is basically a loan, so you have to pay it back. “I’m using a credit card to buy groceries because I’ll earn rewards for it. Thus, it pays to talk about debt and loans with your kids, just as you talk about saving and spending.įor example, if your child is with you at a store and you pay with a credit card, take a minute to explain. Of course, kids under 18 can’t open their own credit accounts, but they’ll face these decisions as soon as they reach legal age. Once your child is riding high on the notion that they can grow their money without lifting a finger, it’s time to show them the dark side of personal finance. “Look, we haven’t made any new deposits since the last statement, but your balance still increased. However you approach it, definitely take the time to review your child’s monthly savings account statement with them so they can see compounding interest in action. Some parents incentivize their kids’ saving with matching deposits, just as an employer can match a percentage of an employee’s retirement account contributions. That’s how interest compounds, in a nutshell. The interest you earn on your savings account deposits becomes part of your balance and earns more interest. But if you deposit it into your savings account, it will continue to work for you. “If you choose to spend this dollar, it will be gone. It’s how adults grow their retirement accounts and it’s a great money lesson for kids. Now things get fun with compound interestĬompound interest is the key to saving. Every state has its own 529 plan - here’s information on the Maryland version. You can also use it to pay for K-12 private school. Funds from your 529 account can be used for qualified educational expenses at institutions of higher education across the country. Smart 529 is West Virginia’s tax-advantaged college savings account. Now is also a good time to open a college savings account for your child if you haven’t already. Any balance greater than zero earns interest. Consider us your local financial partner, making it as easy as possible for your child to grow their savings account balance. You only need $5 to open a youth savings account at JSB and there are no monthly charges or transaction fees. At JSB, we offer a youth savings account for anyone under 18 who has a secondary account holder over 18. Once your child has filled their jar at home, it’s time to take that money to the bank. ![]() They will be able to see their money grow in real-time as they add coins and bills. Try using a clear glass jar instead of a decorative piggy bank for your child’s savings. “We make choices about how to spend our money.”Īs your kids grow, you can help them learn to differentiate between wants and needs, strengthen their delayed gratification muscle, and experience the joy of saving.At a grocery or big-box store: “We’re just here to buy the things we need today.”.“There are things the family wants to buy, too, but we all have to wait and save enough money first.”.For example, do caregivers seem stressed about money? Is it something parents argue about? Now is the time to talk to your kids about money in terms they can understand, such as: Simply put, young children are developing attitudes about money and observing financial cause/effect relationships in their own life. Many of our thinking, learning, and reasoning processes are developed by ages four and five. What has your child learned about money by age five? The answer might be more than you think. Kids Under 18: Teaching Good Money Values and Habits To make this easier for you, we’ve compiled some of our best tried-and-true money tips spanning childhood through early adulthood. As a parent, you are your child’s first teacher, so it’s up to you to set a good example for their financial future. But one thing that will never go out of style is good financial habits. Kids already have a lot to learn between school and ever-changing social norms. ![]()
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