Children might not be responsible for paying bills or maintaining a family’s budget, but Teachers Credit Union Director of Financial Wellness and Wellbeing Jeff Sobieralski believes that the earlier parents begin educating them on finances, the better.
“Teaching children about money is really about their relationship with finance itself,” Sobieralski said. “Money is a tool they are going to work with for the rest of their lives.”
Sobieralski says he and his wife started teaching their kids about money at an early age, and the concept of sharing financial information shouldn’t be regarded as taboo.
“The same way we want them to understand the importance of saying ‘please’ and ‘thank you,’ we also want them to understand the importance of money,” Sobieralski said. “What it’s worth, why it’s important and how to practice smart habits that lead to success.”
Sobieralski adds that children are “little sponges,” learning and soaking in everything, and ages 3 to 6 can be a great time to introduce key financial concepts. While they may not understand everything at this age, he says, building a foundation in finance is crucial. A study from the University of Cambridge found that money habits in children were formed by the age of 7.
Financial education begins at home — children’s economic choices are often shaped by their parents, either through direct learning or simply by being in the same environment — and TCU offers resources to help parents teach their kids financial responsibility.
TCU has a Kids Club to encourage kids to save. When a youth account is opened, TCU gives the child a piggy bank. Each time a child visits TCU to make a deposit, they can choose a Kids Club prize to reward them for taking care of their money. He also encourages parents to help their kids set a goal of something they would like to use the money on. (Sobieralski says his kids are saving for a car!)
He also routinely includes his children in discussions of the family budget and asks them to help decide on spending priorities. Teaching pre-teens the difference between wants and needs can help build day to day habits that will shape how they earn, save and shop as adults.
Weighing decisions such as “if you buy this, you will not have enough money for that,” helps teach budgeting and savings skills that prepare kids for a successful financial future, he says.
For young people ages 14 to 23, TCU offers a Student Rewards Checking account which includes special benefits, such as no minimum balance. Sobieralski says first-hand experience with a checking account is a great way for teens and young adults to learn the basics of budgeting.
“From age 14 to 18, kids’ eyes are on the future,” Sobieralski said. “At this age, we are preparing them to go out into the world. We want to make sure they are equipped with those life skills that will yield success.”
He believes that a checking account tied to a debit card is a necessity. It helps teach teens that money comes from somewhere. And as teens begin to earn money, setting up an account is a great way put a real budget plan to use.
Sobieralski also recommends that if you purchase a car for your teen to use, explaining the process and responsibilities associated with getting a car loan is “a fantastic transition” into a conversation about credit.
“Explaining the potential dangers of credit card debt and how to build a positive credit history,” Sobieralski said, “can put your child ahead of the game as they ready for college.”
He also recommends some formal personal finance training. If it’s not offered at your child’s school, TCU offers FoolProof tools to members — and the entire community. FoolProof is a free online learning program designed by consumer advocates to deliver financial literacy programs for middle- and high-school students to retirees.
“Young people have to get student loans. They have to pay their grocery bill,” Sobieralski said. “There are a lot of things that we need to know about money for, and it’s not always taught in school.”
Technology is also making it easier to introduce financial concepts to children. FoolProof is developing an app to allow kids to design a character that can make financial decisions to show how those decisions impact short and long-term wealth.
While apps can be a useful way to introduce some of the concepts related to managing money, Sobieralski says apps shouldn’t solely be responsible for educating children on financial concepts. Just like personal finance curriculum in school, these tools should only be used as supplements to lessons taught at home.
“It’s important to start teaching your kids good financial habits at a young age,” Sobieralski said. “As someone who has been in this industry for nearly 20 years, I can tell you if you don’t start teaching your kids how to handle money, someone else will.”