Educating Children About Money and Smart Spending Habits

Start Early To Teach Kids Smart Spending Habits

It’s easier to spend money than it is to talk about it. However, teaching our children the basic principles of personal finance at a young age can help them avoid costly mistakes when they get older.

Knowing where to start can be difficult. Many people just don’t feel confident in their financial literacy, or their ability to understand and manage money. Even if they do understand personal finance, they may not have a strong track record of success when it comes to spending or saving responsibly.

Take a look at Hawaii residents, for example. On average, we carry an average of nearly $6,000 in credit card debt, and have one of the highest mortgage debt rates in the nation. Nationwide, more than half of Americans have less than $1,000 in savings, meaning they’re just one medical emergency or car trouble away from financial hardship.

That’s all the more reason to give children a strong foundation for making wise financial choices. Age-appropriate lessons help instill healthy financial habits that will pay dividends for the rest of their lives.

Elementary School: Teach your child that money is earned by giving a small allowance

Younger children may not be ready to understand high-yield bonds or credit scores, but they can learn basic concepts of earning, spending and saving.

Teach your child that money is earned by giving him a small allowance for chores. Let him keep it in a clear jar that will fill with bills and coins, offering a visual incentive for him to save. When he wants something from the store, remind him that he’ll need to count out that money from his jar when he gets home.

Take your child to a bank or credit union and open a joint account with no minimum balance or account fees. Encourage him to save half of his birthday or holiday money and watch his balance grow. Make this a habit early on, and when he gets older, he’ll be accustomed to setting aside part of his paycheck for saving.

Middle School: Teach your tween financial patience by saving for a big ticket item

Teach your tween patience by saving for a bigger-ticket item. Help her set a goal, like a new gadget she’s been eyeing, and have her calculate how long it’ll take to earn it by putting away $5 or $10 a week.

Your child will probably be tempted by other items on the way to saving for her goal. Let her make the decision when it comes to spending money she’s earned, but talk about the consequences of giving in to every temptation. She’ll learn that paying for one item she wants now will mean she’s putting off another purchase until later.

High School: Teach your young adult to be a smart spender and avoid debt traps

It’s time to step it up with real-world lessons that will help your young adult be a smart spender and avoid the debt trap when he moves out on his own.

If you haven’t already, help your teenager sign up for online banking. Show him how to check his balance and track his purchases, so he can avoid spending what he doesn’t have.

Teach your teen about credit cards and how they work. Children see us paying with plastic frequently, but they aren’t often privy to what happens when the bill comes. Let him know that credit cards are not free money, and that he should make it a habit to pay his balance off each month.

Gaining financial knowledge and skills are valuable at any age. Look for teachable moments to talk with your children about money, and they’ll be better equipped to make smart decisions when it’s time to manage their own finances.

About HSFCU Marketing

Hawaii State FCU firmly believes that financial education empowers people to make smarter decisions throughout their lives, resulting in a better financial future. We do this by providing useful financial tools such as educational blogs, online courses and free webinars on a variety of topics including planning for retirement, debt management and buying a home. For more information on these and other resources, including free financial calculators and budget-friendly recipes, visit and click on “Financial Health.”

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