Teaching children to save for a rainy day during Financial Literacy Month

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According to an online survey from D.A. Davidson, more than half of respondents said that having more financial literacy education would have helped them manage their money better through the pandemic. Pandemic or not, the benefits to teaching children early about money management add up. Equipping our youth with the tools to manage their money early on empowers them to lead more financially secure lives, save for emergencies and create their own wealth.

During April’s Financial Literacy Month, IBERIABANK-First Horizon is taking a proactive approach to educating youth in grades K-8 about the importance of money management through virtual classes designed to teach children to save for a rainy day. But like most life lessons, financial awareness should always begin at home.

Here are five tips to teach your children or grandchildren about finances:

Be open about money with your kids. Communicate your values and experiences with money. Encourage them to ask you questions and be prepared to answer them — even the tough ones.

Budgeting 101. Teach your kids the basics of budgeting at a young age by using their allowance or birthday and holiday money to track expenses. Whenever they receive money, have them divide it equally into three jars labeled “Saving,” “Spending” and “Sharing.” They can use the spending money for smaller purchases like candy and the sharing money to give back to others in need or local charities. The savings should be used for more expensive toys or games they want to purchase but need to save up for.

Need vs. Want. It is so important for our youth to understand the difference between a need and a want. You can do this at the grocery store by using different foods as an example: Milk for strong bones is a need; soft drinks are a want. Have them identify a new toy or bike and then teach them how to save up for “wants” over time, through chores, good grades, weekly allowance or babysitting a sibling.

Invest Early. Open up a savings account at your local bank for your children and take them with you to make deposits, so children can learn how to be hands-on in their money management.

Be an example of a responsible money manager. Involve them in your own journey to pay bills on time, being a conscious spender and an active saver. Children tend to emulate their parents' personal finance habits.

Remember, the best financial lessons are part of everyday experiences. It’s never too early to start talking about money with your kids or grandkids. If they are old enough to ask for a toy or bike, they are old enough to start learning money management lessons that will last a lifetime.