Video: Teach Your Children How to Save and Spend Wisely
Video Transcript: Teach Your Children How to Save and Spend Wisely
Hi. I’m Elsa M. from Quicken with advice on how to turn young consumers into smart consumers.
Did you know that teenagers spend more than $100 billion a year? Children under the age of 12 — $11 billion.
How can parents teach kids to spend and save wisely?
Once your children can handle basic arithmetic, let them help plan a grocery shopping trip. Decide how much to spend and then ask for their help in getting the most for your money.
Allowances are a good way to introduce kids to spending and saving their own money. Insist that they save a portion of it and put it in a glass jar so they can watch their savings grow.
When your children reach middle school, open a savings account for them. Explain how money in a bank earns interest on the opening balance, plus interest on the interest, a process called compounding. Children enjoy hearing that their money is working for them.
Ask older kids to write a budget with your help. Then step back. Monitor spending but don’t manage it. They’ll learn from their own mistakes.
When your children reach high school, open a checking or debit account for them. But saving should remain the watchword. By now they should start to grasp the difference between short-term saving for an iPod versus saving for long-term goals such as college.
Supportive parents raise informed consumers.
For more information on budgeting, visit Quicken.com.