Atlantic Blog

April is National Credit Union Youth Month. Unlike other institutions, credit unions are not-for-profit, and one of the seven foundation principles is education. Atlantic Federal Credit Union wants to see our members succeed and gain financial strength.  One of the most important financial lessons for kids is to teach them the power of saving money.

Before they are old enough to receive an allowance, let them help you shop at the grocery store.  Teach them how to comparison shop—for example, show them that for every $5 box of cereal, there may be similar brands on sale for half as much. 

When should children get an allowance? Start one as soon as your children start recognizing money's worth--kids do this fairly early. Janet Bodnar, the editor of Kiplinger's Personal Finance magazine in Washington, D.C., stresses two points in her book Dollars & Sense for Kids:

• Don't give an allowance until children are old enough to manage it, or until your children are at least six years old. There's no need to rush things and preschoolers generally don't understand the abstract idea of money anyway. Once children start first grade they begin learning about money in school, so they know if they get a $1 bill each week, it's equivalent in value to ten dimes or four quarters.
• Keep the system simple so you can manage it. "Denying kids an allowance doesn't make it easier to limit the amount of money they get their hands on," says Bodnar. Because most children will get the money out of parents anyway, it's better to teach them how to manage it themselves than allow them to nickel and dime you to death. Plus, using an allowance gives parents and children more control over the children's finances.

If you decide to pay your children an allowance, include them in the decision. Discuss allowance amounts and what they should use their allowance for. The amount is your call but allow their input. One idea is to have children set aside part of their allowance for spending, part for saving, and part for sharing. Explain what you'll pay for and what they should be responsible for. As an example, when you're at the movies, maybe you agree to pay for the movie ticket, but the Milk Duds are on them.

Having an allowance can help children understand the concept of budgeting and saving, but you have to teach them. Look for teachable moments and bring the topic up naturally—without ever lecturing them.  As children get older, let them know what things cost. Share sales receipts and bills that you receive for items or services you've purchased for them. Teach children how to save and they’ll have one of the most difficult aspects of finance mastered by the time they're teens—being consistent savers.

For children 12 and under, Atlantic offers a Youth Savings account to help them learn money management through real-life experience. We’ll reward their good behavior with competitive dividends and prizes.  When they are old enough they can get their own Atlantic Free Kasasa Checking account and get rewarded with cash.

Growing up healthy is more than just eating vegetables and spending less time in front of a screen.  Be sure to think about your child’s well-being in terms of their financial health.

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