Summer Financial Training School

Are the little entrepreneurs in your home working extra hard this summer to earn money with their lemonade stands and summer jobs? No matter what their ages, this may be the perfect time to teach your children about budgeting. Below are some valuable money management lessons you can provide your youngsters.

For younger children

Money As You Grow suggests children split their allowance into three labeled jars: one for savings, another for sharing and one for spending. If your youngster has not yet learned to read, try differentiating the jars with colored lids or have your child draw pictures that represent each jar. For example, if your daughter wants ice cream sometime this week, label the spending jar with an ice cream cone. The savings jar could have a picture of a more expensive toy or book. The sharing jar could have a picture of a gift she would like to give to a friend.  

When the ice cream truck rolls around, you can help them count their spending money and select a treat they can afford. Once your children have saved enough money for their more expensive item, you can take them to the store.

For preteens

Preteens should have their own savings accounts and make regular deposits. They should start planning long-term savings goals. Instead of saving for the next toy, they could set their sights on a tablet or a new outfit. To save effectively, you may need to help determine how much money must set aside to reach their financial goals in a reasonable timeframe.

Help your preteens set up a spending and saving journal. They may be tech-savvy enough to use some features of an online personal financial manager such as AltaOne's BudgetPro. If they feel they are not reaching their goals fast enough, this will help identify ways to trim expenses.

For teens

Teens will have more income and expenses to track. They will likely earn and save more money from part-time jobs or bigger allowances. They also have greater responsibilities and expenses -- gas for the car, movie tickets, beach trips or summer swimsuits. A detailed budget can help teens avoid over-spending and fail to reach their savings goals.

As parents, clearly communicate which expenses you will cover and stick to the plan. If you bail out your children every time they whine for cash, they will not learn to decide between "wants" and "needs" as they get older and must make crucial financial decisions. Encourage your teens to closely track their income, expenses and savings in a journal or online financial manager.

Your teens' saving goals should increase as college approaches. Spend some time researching the cost of attending college. Be transparent about what expenses you can cover, factor in any financial aid available and help them to come up with savings strategies for the rest of the costs.   

Cherise Fantus, NerdWallet

Categories: Financial Aid, Kids, Parents, Savings, Savings Accounts