Advice from Our Michigan Bank
Children living through COVID-19 may be experiencing their first financial downturn. Teenagers may remember the 2008 recession, but the economic effects of the 2020 pandemic appear to be more profound for the U.S. economy. It may be useful (and comforting) to talk with your kids about money and managing finances.
Our Michigan bank compiled a few tips to help guide your conversation.
- 1) Start early, but keep it simple and age-appropriate.
If your child is learning basic math and arithmetic skills, it's an excellent time to teach them the fundamentals of money. You won’t need a 4-hour lecture, just a few ideas. FamilyEducation.com suggests the following:
- Explain the types of currency available in the U.S.
- Demonstrate the values of currency with easy exercises like making a mock purchase and then counting back change.
With older children and teens, you could show them a basic budget, including a line-item for savings.
- If you provide an allowance or a commission for household chores, encourage them to put some money aside in a clear jar or savings account so they can watch their money grow.
- Help them weigh their spending decisions, showing that money is a limited resource. For example, if you buy that video game, you won’t have enough money for those cool new name brand shoes!
- 2) Be honest about your finances without overwhelming your kids.
The value of money becomes more precise with concrete examples. If you need to cut back on spending because your employer furloughed you during COVID-19, explain how your budget is changing. Having a family meeting about the household budget, where parents have the final decision, is a useful forum for showing your children that you understand money management.
Helping your children become financially responsible will teach them how to cope with money challenges. They’ll become more adept at setting a budget, staying within their limits, and avoiding impulse purchases.
They’ll also learn that money, while a limited resource, is an essential element for achieving their goals and dreams.
For more information about savings tools for children, contact the Level One Bank team. We’re your financial partner in the metro areas of Detroit, Grand Rapids, and Ann Arbor.
“One of the greatest gifts you can give your children is to prepare them to be responsible, empowered adults around money.” —Unknown, but they knew what they were talking about!