A Guide to Kids and Money

Managing money for your family can seem overwhelming. The prices of groceries, clothing, seemingly everything continues to rise. Learning how to save money and teach your kids great financial habits can help reduce the stress that rising bills may cause. Whether you’re looking for tips for yourself as the head of the house or ways to help your kids learn from your mistakes and successes, you’re not alone. This guide about kids and money will help you build a strong foundation for your family and teach your kids smart and healthy ways to think money.

Family Money Tips

Wouldn’t it be nice if the amount of money in our bank accounts magically grew when we had another kid? Unfortunately, this isn’t reality. However, there are ways that we can stretch our money. Before exploring these options, create a budget first. This helps you clearly see how much money is coming in and where it’s being spent, making it easier to effectively manage your money.

Look for gently used items. Kids can grow out of car seats, sport equipment, and strollers extremely fast. When you need the next size up, consider buying a gently used item instead of a new one from the store. Websites like Facebook Marketplace and eBay allow you to find items in the area and around the world that you can buy from the previous owner. This has the potential to save you hundreds of dollars, but watch out for those shipping costs.

Buy and sell at resale shops. That dress you bought your daughter two weeks ago might be too small in two months. Take your children’s used clothing to local resale stores to get cash or store credit offers. You can use that money to buy their next few outfits too. These same types of stores exist for adults too. Try this with your own wardrobe to find trendy and unique clothes at a fraction of the cost.

Eat at home. While grabbing lunch in the drive through can be a lot more convenient, fast-food prices continue to rise. Instead of eating out, eat at home instead. Even though the cost of groceries keeps climbing, it Is still significantly cheaper to prepare a meal at home than to grab a meal on the go. That’s even more true for a sit-down restaurant. Meal prepping your kids’ snacks and lunches can save an outburst from being hangry when you are on the go too. Meal prepping can take time, so try to get it done when the kids are out of the house or during naptime.

Carpool. Driving with friends can save both families money over time. If your kids are in sports, take turns driving to practices and games during the week. If you have a coworker that lives nearby, alternate who drives every day. Even better, if you and your partner work in the same direction around the same time, you can carpool too. Plus, this will prolong car expenses due to wear and tear for a while.

Money Tips for Parents

Your kids might pick up on the differences you make from those habits. Many of the tips directly impact them in some way. There are still more ways that you can save money that can make more of an impact on you as a parent.

Plan a budget-friendly date night. Quality time with your significant other away from the kids can be crucial for a happy relationship. Luckily, date nights don’t have to be expensive if you plan ahead. By setting a budget, you can enjoy your night without making a dent in your checking account after your night is over. Enjoy a homemade cocktail from the deck instead of in a dimly lit restaurant. Going on a drive down memory lane (literally drive past your first apartment, where you met, or where you got married) is a sweet ride together.

Comparison shop. It doesn’t matter if you’re buying clothes, food, or household needs, there’s likely a cheaper version of the product you want. Compare the prices of what you normally buy with what you could buy as an alternative instead and notice the cost difference. If the other product works just as well, save some money by choosing the alternative.

Swap kids with your friends. What are you going to do with your kids on date night? Set up a schedule with friends who also have kids and take turns watching the littles. To your kids, it’s a playdate with their buddies! Return the favor so you all can have date night. If you don’t have friends with kids yet, many people would be happy to watch your kids for a few hours.

Invest in your house. Your home might be in need of upgrades since you’ve had kids running around. A home improvement loan from Alltru can be used to borrow up to $25,000 with a low interest rate and flexible terms. Taking out a loan to put money into your house now can result in a higher sale when you move to a new home in the future.

Consolidate your loans. If you have a few loans already, consolidate your loans into a personal loan from Alltru. While this might cost you more money in the long run because of interest, it can reduce your monthly payments, freeing up money for essentials like groceries, gas, and other bills.

Low-Cost Family Activities

Family outings can quickly get expensive. Tickets to a sporting event, lunch at a restaurant, and a day at Six Flags are popular but pricey options. And those are all local forms of entertainment. What about vacations? Those are even more expensive. See if you can prolong your vacation until your vacation budget is fully funded with these fun low-cost options. Here are some activities to occupy your time while you wait.

Spring Activities – Get your bikes out of the garage and go on a family ride. The St. Louis area has so many parks and trails, like the Katy Trail, that can provide hours of adventure. Since you’re cleaning out your garage anyway, have a garage sale! Encourage your kids to find a couple items a week that they want to contribute to the stash of things to go. Let them keep the money they earn from selling their belongings to spend at another garage sale for the next source of budget friendly fun.

Summer Activities –  While outdoor chores in the summer aren’t fun all the time, they can be more enticing when you make money while doing so. Teach your kids how to do basic yard work or how to walk dogs. Promote your children’s new business around the neighborhood as a way to earn a little cash out in the sun. Make a visit to the St. Louis Zoo to see animals from around the world. Indoor attractions at the zoo provide an escape from summer the heat too.

Fall Activities – Visit a pumpkin patch for hours of corn mazes, pumpkin picking, and more. There are several in the area including Theis Farm & Market and Brookdale Farms. You can bring your pumpkins home and create jack-o’-lanterns with a few simple tools. When you visit Eckert’s in the fall, you can pick your own apples and berries when they are in season. Take your fruit home to bake a tasty pie or homemade preserves.

Winter Activities – In St. Louis, we get snow a few times during the winter. If your kids want to be outside, take them sledding down Art Hill. If they prefer to stay indoors, visit the History Museum or the Art Museum. While you’re there, create a scavenger hunt of displays for your kids to find. If your home has a fireplace, have an indoor smores night. You only need a few simple ingredients to make such delicious snacks.

Having Tough Money Talks

Budget-friendly activities are valuable for everyone, but they make the biggest impact for families facing financial challenges. Discussing financial difficulties with your kids can feel tough, especially when you’re not proud of your situation. To help with these conversations, here are some useful tips for talking to your kids about money when times are hard.

• Consider their age. Little kids can escalate the situation out of proportion without knowing any better. Older kids might have picked up on the situation already if you have made any changes to your lifestyle. Speak to your kids at their level and with terms that they understand. Clarifying any details prevents misunderstanding and an inaccurate view of your situation.
• Be honest. As much as we would like to protect our kids from reality and tell them everything is okay, reality might tell you that you’re not okay. Be honest when explaining the situation to your kids. If they know you are being honest with them, they know that you care about how the situation will affect them.
• Emotions are okay. This goes for you and your kids. Your children may be confused and start to worry or get upset about unknowns that may come. You probably aren’t proud of the situation you are in either. Create a safe space for your kids to express their emotions by revealing your emotions too. This is not to put stress on your kids but to let them know that you are taking the situation seriously.
• Have hope. Financial challenges don’t have to last forever. Create a plan to get your finances under control and do your best to follow through. Your mindset matters. If you act defeated, your kids will sense it and feel worried too. Keeping a positive and determined outlook can help your kids feel more secure and hopeful.
• Let kids ask questions. After all of your explanations and your kids’ emotions, they’ll probably have some questions. Let them ask what they want to know. If they have a better understanding of the situation, they can be more confident to trust your plan to get out of your rough patch. Remember to keep their ages in mind when answering the questions your kids ask.
• Work together. Bringing a family out of a hole requires effort from everyone, especially the adults. As the caretakers of your kids, it’s important to be on the same page about taking control of your finances and getting to a more comfortable spot. If you can’t seem to agree, motivate yourself to compromise for the sake of your kids. If you need help navigating financial decisions that may come, talk to a financial advisor at Alltru.

Allowance System

If you are in a stable financial position, consider giving your kids an allowance. Parents have varying views about this topic; some give their kids cash simply because they can, while other have their kids earn it through chores. If your kids have a basic understanding of how money works, then it’s not a bad idea to implement an allowance system as a valuable teaching tool. Here are a few different allowance strategies to try with your kids.

• Completing chores – This method can be executed in several ways. You might need to try a few options to determine which one will work best for your family. Depending on your children’s ages, you can award them with an allowance for daily tasks they complete or only for tasks that are above and beyond their normal expectations. You could create a list of options they can choose from or have them complete the same chores daily or weekly. You can also adjust the incentive for more difficult or time-consuming tasks.
• Rewarding good deeds – This method of giving an allowance lets a child earn an allowance for doing a good deed. This could include helping a younger sibling with homework or helping make dinner this weekend. By following this strategy, you let your kids know that you see and appreciate the kind things they have done without being asked. Be careful to not set an expectation that every single nice behavior that they do will be rewarded.
• Borrowing from “the bank” – This method goes a step further than completing chores or doing good deeds. Once your allowance system is in place, you may offer to serve as a bank for your kids where they can borrow money from you in exchange for completing more tasks around the house. However, they must also do another task in addition to mirror the real world with interest. Carefully keep track of how much your kids borrow and if they have paid their debt to make this an effective option.
• Earning points – Instead of letting your kids spend their money impulsively when strolling through Target, use the points system. Plan ahead with your kids for something not so cheap that they want to buy. Convert the dollar amount into points. Award your kids with points instead of hard cash for completing their chores. When they have earned enough points, make your visit to the store and purchase the item for them.

Money Basics for Kids

It’s never too early to start talking to your kids about money. If they don’t learn from you, they are going to learn from someone else who might not be as trustworthy. The best way to know what your kids know is to be the one to teach them. Here are some tips for introducing your kids to money.

Take it easy. There is no need to rush into teaching your kids about 401(k)s and mortgages when they don’t understand how a debit card works. Have age-appropriate lessons with your kids. When your child is old enough to count, introduce them to coins and dollar bills. As they start to understand addition and subtraction, ask them to count your change when you’re running errands together. When they are older, give them a few dollars and send them on a mission to purchase a couple items for you.

Honesty is key. No matter if you are in a great or not so great spot financially, we can’t get everything we want. If a toy costs too much right now, or you just don’t need another one, let your kid know. “That isn’t the best way to use our money right now.” When your kids get older, you can be a little more transparent if your electric bill was higher than expected so you must cut back on eating out next month to accommodate.

Start an allowance. As we already mentioned, there are several different allowance strategies you can try with your family. In most situations, with allowance and adulthood, nothing is free. You have to earn what you get. For your little kids, you can explain how mom’s and dad’s jobs give them an allowance too. Having your kids complete chores for an allowance can develop a strong work ethic in them too that can reap benefits for years to come.

Money is Fun!

While how you manage your finances needs to be taken seriously, we should avoid scaring our kids with money. Kids can be intimidated if it seems like money is the end all be all in your house.

There should be a balance when it comes to teaching your kids about money. Yes, it should be handled with care, and mistakes happen sometimes. However, we can learn to be smart with our money so wise financial decisions become second nature.

If your kids are feeling overwhelmed or you simply want to make learning about money more enjoyable, here are some fun ways you can teach them about money.

Let kids see their savings. If you have an allowance system or if your kids have been gifted some cash for their birthday, keep the money in a clear jar instead of a solid piggy bank. If they can’t see it, it doesn’t exist. When they receive more money, they can put it in the jar and literally watch their savings grow!

Take your kids shopping with you. Next time you make a Target or grocery run, take your kids with you. While they may slow down you errands, it’s a great way for kids to learn how money works in real life. Bring a shopping list with you so you can hunt around the store together to look for the items you need to buy. Have your kids keep track of how much money you will spend on your purchase. When you check out the items, see who was the closest.

Play Monopoly. Board games like Monopoly can teach kids about the long-term effects of how they spend their money in a safe environment. Encourage them to ask questions about what purchases they should make and which ones they should pass on. If your kid is a little older, have them be the banker too.

Visit Alltru. Kids ages 12 and under can open a CUbby Savings account with a parent or legal guardian with just $1. After opening an account, they’ll receive a savings tracker in the mail to help them start saving money. They even get a special prize for deposits over $10 and on their birthday! If you’re not quite ready to open an account for them yet, consider bringing them along during your visit to the credit union. They can watch you deposit or withdraw money with the teller and see the Coinstar machine in action, giving them a firsthand look at how banking works.

Financial Literacy Resources

While the ideas mentioned above are great ways to teach your kids about money, they don’t cover all aspects of financial literacy. Financial literacy is the ability to understand various financial skills, including personal financial management, budgeting, and investing, and know how to use them effectively.

When teaching your kids about money and financial literacy, you can never have too many resources. There are several resources that cover a variety of topics related to financial literacy. Here are some of my favorites.

• Sesame Workshop is the nonprofit organization behind the show Sesame Street. Preschoolers can learn about money with their favorite tv friends. The content is pretty basic but makes learning fun for little kids. The site also has resources available in Spanish.
• Million Bazillion is a podcast that tackles questions kids may have about money, such as “How does inflation work?” and “How is money made?” The podcast has over 50 episodes, and more are still being released. The episodes are around 20 minutes long, so they are easy for kids to understand.
• How to Turn $100 into $1,000,000: Newly Minted 2nd Edition is a book written by the creators of the tv show BizKid$. The book teaches kids how to make money, save money, and grow money. This is the second edition of the original, so it covers up-to-date financial topics.
• Khan Academy has several units about financial literacy and personal finance. While they don’t suggest a specific age range, these sections are suited best for preteens and teenagers because of the depth of the content. Khan Academy resources are free too!
• Zogo is a financial literacy app that challenges users to complete daily trivia and other lessons to earn points in the form of pineapples. Pineapples can be redeemed for rewards like gift cards to your favorite stores. With over 380 lessons to choose from, you can learn from a wide range of topics. As all Alltru member, you can get Zogo for free with the access code ALLTRUCU.

When Should Kids Start Saving Money?

Now that your kids have a better idea of how money works, you might be wondering when to start encouraging them to save. Kids can learn how to spend money a lot more easily than learning how to save money.

If you haven’t started already, this is a great time to introduce saving. You may have already accumulated some cash from their birthday or holiday gifts. Perhaps you’ve opened a savings account to deposit checks they’ve received over time, or you started a college fund for them when they began kindergarten.

It’s never too early to start saving money for your kids. Any amount of money you save for your kids now is less money they must earn later. By investing the money in a savings account now, you allow it to earn interest, which can significantly increase the total over time compared to what you initially deposited. Starting early can make a big difference in helping them build a solid financial foundation for their future.

A great way to introduce kids to saving money is by giving them an allowance. We’ve already discussed strategies and benefits for giving an allowance a few times. Giving your kids an allowance opens a door to teach about managing their money responsibly. Whether this is completely given or earned, encourage your kids not to just spend their money, but to save their money too.

As they get older, give them a little more freedom. If you start with saving money for your kids and then encouraging them to save their own money, they should have a sense of understanding down the road. Give your kids more freedom to do what they want with their money when they are older. If you’ve stressed the importance of saving, they can follow these concepts when they have the choice to do what they want.

Tips for Kids Saving Money

Since it’s never too early to teach kids to save their money, how do you teach them to save? As much as you would like them to learn by watching you save your money, you might not be saving as much as you would like to because of lots of expensive bills to pay.

Teaching your kids good money habits now is easier than trying to help them unlearn poor habits and learn from their mistakes later. Even if you have made poor choices with your finances, I think most of us would agree that we’d rather have our kids learn from our mistakes than repeat them.

This can be a little tricky, but do your best to still lead by example. If money is tight, stress the idea that you are still finding ways to save. You can show them that what you have saved has grown interest, and now you have more money than when you started. If you have money to deposit, take them to the credit union to show them how it works. While you are there, open a CUbby Savings account for them to save their own money too.

Since you have shown them how to save money, explain the importance of saving money. Saving money allows us to pay for expensive items later. Saving also allows us to pay for emergencies when they happen. When we save our money, we can also generously gift others. Helping your kids see these realities in your life and their lives help emphasize this even more.

When your kids are ready to save, help them set a savings goal. Maybe their goal is to save 50% of their total allowance by the end of the month, or $50 by the time school starts. No matter what you set the goal to be, hitting that goal is a great accomplishment. Let your kids spend a little of the money they saved as a reward or give them an incentive instead to celebrate their achievement.

Money talks with your kids can seem easier when they’re young. These conversations can look completely different when they are teens. Many of the people I grew up with did odd jobs well before they turned 16 years old.

Money Management for Teens

As you might expect, when teens start earning their own money, they want more control over their own money. Before letting them have free rain over their finances, it’s important to make sure they have a good grasp on money management.

Here are some effective ways to teach your teens about money management.

• Set up checking and savings accounts. Alltru’s StepOne Checking and Savings accounts can be opened with just one dollar each. Teens can manage their money through mobile and online banking. Before you open these accounts, set boundaries together so you and your teen are on the same page of how their money should be spent.
• Encourage them to get a job. Jobs that require a strict schedule with clocking in and out teach teens a lot about responsibility. Plus, they’ll now have a somewhat stable amount of money coming in regularly. This makes it easier to help them create a budget and create financial goals.
• Teach them about insurance. The first big purchase a lot of teens want to make is buying their own car. If they aren’t ready for that yet, have them take over their current car insurance payments. You could also have them pay the increased cost of being in accidents. If you don’t have car insurance, you can’t drive. Because of this, paying for their own car insurance will keep them accountable or teach them a hard lesson early on.
• Build on their personal finance class in school. The state of Missouri requires that high school students complete at least one semester of a personal finance class before they graduate. Follow up on what they are leaning in class. Give them real-life examples of how the concepts have impacted your family.

Teen Checking Accounts

If you need a little more convincing that you should help your teen open a checking account, keep reading. There are many benefits for teens when they open a checking account. These benefits can make a difference now and in the future. Plus, teens can get a free debit card when they open their account with Alltru, so they won’t need yours for online purchases.

• Their money will be kept separate from yours. Depositing money from more than one person into one account can create a financial mess. Opening a checking account with your teen creates a place for their money to be kept separate from yours. This could also help create accountability for both of you by being in control of all the money in an account. This will be helpful when you both file taxes.
• Checking accounts help build a strong financial reputation. While your teen might not be ready for a credit card yet, a checking account can help them build credibility for when the time comes. Many lenders ask for bank account information when applying for student loans and other types of borrowing. Helping your teen build a foundation now can give them a leg up a few years down the road.
• Your teen may be eligible for a Rewards Checking account. If your teen has kept a positive balance in their checking account with no overdrafts, they can apply for a Rewards Checking account when they turn 18. Our Rewards Checking account has high interest rates. Plus, users can choose from a variety of rewards that will work the best for them.

Teen Savings Accounts

Helping your teen create a budget can establish how much they have to spend and how much they need to save. Saving money just for the sake of saving isn’t exciting to teens when there is so much that they can buy with the money in their checking account.

Even if your teen doesn’t need to save since you can pay for a lot of their expenses now, teaching them how to save will benefit them in the long run as they establish good financial habits they’ll need in adulthood. Here are different strategies to use when teaching your teen to save money.

• Set a savings goal. When your teen lands their first job, help them establish savings goals so they have a safety net of money waiting for them in the future. If your teen can plan ahead, set a goal to hit by the end of the year. If your teen is known to procrastinate, break down the end-of-year goal into a smaller, monthly or quarterly goals.
• Budget a percentage to save. if your teen doesn’t have steady income yet, encourage them to save a percentage of what they get paid. By saving a percentage, they are saving what they can when their income is high or lower than where they would like. This teaches them to keep saving even in unideal situations.
• Think-long term. Saving money can seem like a buzzkill in the moment. Help your teen think long term by saving for larger purchases later. This could include saving for a car, a nice laptop,  or their first year of college. Help them create their budget so they save a little for this major expense every month to help offset the cost in the future.
• Prevent impulse shopping. If you are regularly with your teen when shopping, encourage them to wait to buy. Impulsive shopping can quickly lead to a lot of money wasted on things they don’t really need. If you’re out shopping and see and item you didn’t specifically come to buy, think about it for a few days. If you still desire the item, come back later and make the purchase. If you don’t buy the item or items, you just saved some money! This principle works best when you and your teen both follow it.

Conclusion

Managing your money for your family can be so rewarding. Raising kids is expensive. Finding ways to save money with kids in your house can really add up overtime. Saving through low-cost activities, eating at home, or investing in your house are great ways to stay in control of your finances while your cost of living continues to rise.

By teaching your kids about money at a young age, you can give your kids a healthy view of money. It should be taken seriously but not overwhelm your every move. Learning about money can also be fun when you work directly with your kids by letting them help you shop and visit the credit union. As your kids become teens and have more financial freedom, more responsibility will follow. Picturing these changes as opportunities for growth can encourage healthy habits in your teens.

Good money management affects the whole family. At Alltru, we’re here to help you every step of the way. Whether you’re looking for solutions for your kids, teens, or yourself, your family can benefit from The Better Way to Bank.