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Race Day September 22, 2018

Healthy Living Expo September 20-21, 2018

Helping kids build a healthy relationship with money

, by Darren Schuldheiss

Whether it’s putting a quarter in the piggy bank, buying an ice cream cone from the ice cream truck or getting to spend birthday money, children begin forming a relationship with money at a much earlier age than most people realize. Many times, this relationship is defined by unrealistic expectations—money is easy to come by—and unsustainable behaviors—if I want it, I can buy it—that become real obstacles when kids transition toward adulthood.

Children need to understand how to earn money, why saving money is important and the benefits of making smart financial decisions. Here are some tips to help your children build a healthy relationship with money.

The ability to earn
The most important lesson parents can teach their children is that money is earned. Allowance for household chores is a great place to start. Create a list and hold your children accountable for doing their job.

The value of savings
Equally important to the lesson that money is earned is to create the understanding that earned money is power. And as superheroes like to say, with power comes responsibility. Set ground rules about how your child manages his or her earned money.

The power of execution
The concept of compounding interest is a difficult concept for kids to understand. Studies have found that the problem with long-term planning is that people don’t see the benefit. They think of their future selves as a stranger. To reinforce the importance of staying the course, provide financial incentives for kids when they execute their plan. For example, when they save $500, provide them with a bonus. Then explain that they have earned interest.

Choosing the right bank
The relationship between a bank and its customer is simple. You let the bank hold your money. They pay you interest for the right to hold your money. Then they lend your money, at a higher interest rate, to a borrower within your community. The thing children need to know about banking is that the relationship matters. When they have money, they should use a bank to help manage it.

Leverage learning opportunities
The new future of financial literacy may very well be about finding the teaching moments. The experts call it “just-in-time” education, meaning that lessons should be applied at the very time when they can be useful. Banks can play a significant role in this approach. Even the most basic accounts provide structure and an opportunity for parents to be valuable banking partners. More than anything, that’s what children need to be successful—positive mentors and role models.

Darren Schuldheiss is president of KeyBank’s Idaho market. 

Tags: financial health,goal setting,life balance