Good money habits start young, and teaching kids about finances doesn’t have to be complicated. Here are five simple, kid-friendly money habits that can set your children up for success in 2025 and beyond:
1. Saving a Part of Any Income
Whether it’s allowance, birthday money, or earnings from small chores, teaching kids to save a portion of their money is a great habit to build early on. Help them understand the idea of “paying yourself first” by setting aside a percentage to save before spending on anything else. Using a clear jar or a savings account can help them see their savings grow, creating a sense of accomplishment.
2. Setting Short-Term and Long-Term Savings Goals
Teach kids the difference between saving for something small, like a toy, versus something bigger, like a bike. Have them set one short-term and one long-term savings goal. Kids learn patience and the value of delayed gratification, which are essential skills for responsible money management. Setting realistic goals helps children see that saving pays off and encourages careful spending.
3. Understanding Needs vs. Wants
Teaching kids to distinguish between needs and wants is foundational for making smart spending decisions. Use everyday examples, like food and clothing as needs and toys and treats as wants. This habit builds awareness, which can be further developed as they grow, helping them avoid impulsive spending and understand the importance of budgeting for essentials first.
4. Practicing Simple Budgeting
Budgeting can be as simple as dividing money into categories like saving, spending, and giving. Kids can put their allowance or gift money into envelopes or jars marked for different purposes. You might encourage them to give a small portion to charity, reinforcing values like sharing and responsibility. Budgeting even small amounts of money gives children a sense of control and helps them learn financial planning from a young age.
5. Learning to Compare Prices
Before making a purchase, encourage kids to compare prices on similar items with varying retailers. For example, if they’re saving up for a toy, they can check different stores or look online to see where it’s sold for the best price.
This habit teaches kids about making informed choices and getting the most value for their money. It’s also a fun way to help them feel empowered by their spending decisions.
Teaching kids good money habits doesn’t have to be complicated. By introducing simple concepts like saving, budgeting, and distinguishing needs from wants, you’re setting them up with skills that will soon become a habit. The new year is a perfect time to start practicing, so give these tips a try and enjoy seeing your kids become financially savvy young individuals!
This column is sponsored by Bay Federal Credit Union
