We’re all different in our parenting styles, but deep down, we all want our children to have the best. Of course, “the best” could be many things—the best career, the best house, the best car, the best clothes. But really, it’s about laying the foundation that sets your children up for success as they grow and become adults. The building blocks of that foundation include lessons and learning that will lead to success later on. One critical lesson is that of financial literacy.

That’s why the American Banker’s Foundation started to recognize the importance of financial literacy, starting at a young age, with Teach Your Children to Save Day. Organizations all over the country today will provide tips for helping children learn to have a healthy relationship with money. Our own financial partners at The Scout Guide Cincinnati whole heartedly support this initiative to pass along healthy habits about money to the next generation and share some insights with us.

Maura Kelly from Bahl & Gaynor Investment Counsel shares some of her best tips for passing on good money habits to your children—tips that she uses with her own children

Ben Beshear from LiveWell Capital shares some of his best financial literacy tips that he uses with his own family.

Studies show that three out of five American adults do not keep a budget, nearly half carry credit card debt, and 25% do not have an emergency fund. Maura Kelly from Bahl and Gaynor Investment Counsel believes that these statistics show the need to start directly teaching financial literacy skills to close this gap. According to the Nonprofit Council, only 21 states require personal finance coursework to graduate high school. “COVID showed us how quickly our lives and financial situations can change without warning. 2020 was a good reminder that we all need to take ownership of our individual financial situations where we can; it’s equally important to begin discussions with our children about how to spend and, more critical, how to save money,” Kelly said. Ben Beshear from LiveWell Capital concurs. “K-12 education, as well as higher education, often misses basic teaching on personal finance. Our country has an amazing educational system, but personal finance is a gap. We believe that being able to make confident and educated money decisions empowers young adults to stretch their dollars further and brings their dreams to within reach,” he said.

Kelly and Beshear share some of their top tips for teaching children to save.

Ages 6-10

Children can learn about an allowance, bucketing their money into Save, Give or Spend Categories. Young children need to see how to both spend and save.

Our experts suggest keeping a money jar where your kids can place the money they receive and literally watch it grow. You can support the effort by mentioning how much the things they like cost and physically have them pull money out of the jar to pay for small things they like.

Make a list of family “needs” and “wants” and discuss ways to accomplish both as a family; new tech devices, home improvement, vacation plans… the list is endless!

Setting healthy examples can start early; you can occasionally say, “I can’t afford that right now, I need to save more money first.”

Allow children to take responsibility for their own things. If they lose or break something, they can help pay to replace it. This could be anything from eye glasses, a favorite sweatshirt or sporting equipment.

Plan a weekly meal menu and shop together for the needed items within a specified budget.

Ages 11-14

Children this age are often ready to understand investments, compound interest and delayed gratification.

At this age, setting a responsible example matters even more. If children see you using your credit card for every purchase you make, they may not understand how spending actually works.

Short, age-appropriate, conversations can go a long way. Be sure to tell them when they want to buy an item with their money that it could mean a future purchase of something they may want “more” might not be possible.

Ages 15-18

Teenagers can often benefit from starting a business in the neighborhood or having a part time job. This experience provides learning on how to save and pay taxes.

The college process and college costs are a great way to educate your teenagers about money. Help your child open a bank account to prepare him or her for managing larger sums. Now is the time to start the “how to pay for college” talk.

This time is also when you should discuss the potential dangers of credit cards and expect them to keep a simple budget.

Before they graduate high school, discuss the magic of compounding interest, what student loans could mean for them, and the basic principles of investing.

By the time your children are young adults they should feel more confident in their ability to successfully manage their money and also know you are a resource to help guide them towards smart decisions if needed.

Investigate with your teen the costs of various college tuitions and keep a spread sheet of the desired institutions, along with scholarship opportunities.

At All Ages

Be sure to incorporate giving within both your conversations and your actions. There is great value in kids realizing the importance of helping others and spreading love and kindness.

Learning financial lessons can be a family affair. Both Kelly and Beshear recommend a family giving fund. As a family, you can put aside and save money and then decide to whom you are going to give it to at a later date. “Generosity lessons stick because it is an easy way at an early age to learn that everything isn’t about you. We become better when we serve a better purpose,” Beshear said. Kelly practices this tactic with her own family. “ We try to balance the ‘make sure we are okay’ with ‘make sure others are okay’ and take a quarterly donation trip to a local charity. Our kids help decide what is donated and have to hand it over themselves. Our lives definitely feel more full on the days we share what we have with others,” she said

When evaluating needs and wants in life, Kelly also recommends making sure to stress that needs always take priority. “At ages 8 and 10, my kids have heard the word mortgage and know that I pay a bank to put a roof over our heads. That was a great conversation,” she said. Children should know that “wants” should be thought out, not impulsive, and only purchased if the money is available to pay for it now, versus depending on credit cards.

Financial literacy is as much about saving as it is about responsible spending. “In 2nd and 4th grade, both of my children have heard the word ‘retirement account’ and understand that saving some of your earned money today is really important for your plans in the future,” Kelly said.

Beshear says he works to pass along important financial lessons that he learned from his family, including: wake up early and work hard; plan for the future but have fun; and be generous. Kelly admitted that money was not something that was openly discussed in her home growing up and has worked to course correct that habit in her own household as an adult. “I recognized as a child that money was a point of stress for my hard-working parents. Like most kids, I was constantly observing and I learned that hard work did not necessarily lead to an easier life if you were not careful about your saving and spending habits,” she explained. She said that these learnings showed her that she had to earn things that were important to her—including bigger ticket items like a car and a college education. This experience has resulted in a personal philosophy she continues to practice and pass along to her children. “The ‘you want it, you help pay for it’ philosophy made me care more about how I was going to make money, think more closely about my spending choices, and perhaps most valuable, how I then treated the belongings I paid for myself,” she said.

If all of these tips seem overwhelming, Beshear says to remember that sometimes the simplest advice is the best. “We believe the key to personal financial planning is deciding what percentage of your income that you are going to save. We recommend a savings rate of 10-20% of your gross income,” he said.

Many Americans live paycheck to paycheck. That’s a cycle we can break by teaching all children, early in life, how to earn and use money responsibly, in our own homes and in our schools, said Kelly, because money impacts almost every aspect of our lives.

If you’re looking for a new financial partner for your family, The Scout Guide Cincinnati is proud to work with the best in the city. You can explore these options in our online directory. We’re proud to work with Bahl and Gaynor Investment Counsel, LiveWell Capital, Carnegie Investment Counsel, Fifth Third Bank and O’Reilly Hutchinson & Bouley Group of Merrill. Give them a call to find the best fit for you and your family. And when you do, be sure to tell them The Scout Guide sent you.