Ways for Kids to Learn About Money at Any Age

Teaching kids about money is one of the most important life lessons parents can teach to their children.  The good news is, you don’t have to wait until they are getting their first job to start implementing good money habits–you can start when they are toddlers!  There are money lessons to be learned at any age, and today we are going to break it down and see which lessons are appropriate in every age bracket.

 

Ages 2 to 4

Start to introduce your child to money by getting them familiar with coins and dollar bills.  Show them all the different coins and tell them their value, and then make up simple games about matching the coins to their values, just to get them thinking about what it all means.  You can even start to introduce simple chores and pay them in the coins you’ve been talking about so they begin to connect the work-money relationship.

Ages 5 to 10

As your child gets older, you can start introducing them into basic personal finance. As their allowance gets a little larger, teach them how to budget their money they earned by using the “spend, save, give” formula.  Teach them the importance of having savings goals, how to give charitably and how to spend their money responsibly.  Show kids at the older end of this age range how you budget your finances.  You don’t have to go into all of the details but show them that you are practicing what you preach.

Ages 11-15

Now that your child has been earning an allowance for a while, it’s time to take them to open up a savings account in their name.  This will make them feel “grown up,” and it will teach them how to handle accounts at financial institutions.  Show them how to make their own deposits and withdrawals so they get familiar with how everything works.  Since they have their own account now, it’s probably time to reiterate the importance of saving money and having money goals.  Also, help your preteen/teen to look for new ways to earn money to work towards those goals.  Can they feed someone’s pets, babysit or mow lawns to generate more income?  

Ages 16 and up

It’s time for your kid to get a real job!  Encourage them to seek time-appropriate employment opportunities in the real world to help them earn more money.  Take them to open up a checking account and show them how to deposit their checks.  When the get their first paycheck, go over the taxes and explain what they are and why they were taken out of their checks.  All of these things are just setting your child up for the real world that is imminently looming ahead.  Chances are your child wants to save for a car or for college at this age.  Not only is this the time to revisit the idea of working towards savings goals, but it can be an opportunity to introduce them to the concept of matching funds.  Instead of an employer matching their 401k fund, you can match their car or college fund.  Set some parameters, and tell them if they reach a certai money in their savings account, you will match them on the amount.  Then explain how some employers do this for their employees’ retirement funds.  

No matter what age your kids are, there is always some money lesson that can be taught.  The earlier you teach them, the more likely the lessons will stick in their minds and become habits when they are older.  Set them up for success by starting early!

4 Money Lessons Kids Won’t Learn in School

School teaches kids many things they need to know, but most schools really lack in common sense money lessons. Kids learn all sorts of math over the years, but rarely does it actually help them learn money principals that will set them up for a bright financial future.  Today, we are going to list several lessons that are not taught in school and how you can teach them to your kids so they will be smart with money.

 

Lesson #1 – Self-Discipline

When it comes to money, self-discipline is the key to success.  Schools today don’t teach the value of self-discipline in your finances.  Kids need to know how to have enough discipline to create and stick to a budget, save money, and how to delay instant gratification.  This is one of the most important lessons they can learn. If they don’t learn how to be self-disciplined at an early age, it will be extremely hard for them to learn that skill as an adult, and the lack of self-disciple can sneak into other areas of their life as well.  As parents, you can teach them how to be self-disciplined by teaching them how to set money goals for the money they have.  If they have a certain goal to attain, they will learn the importance of saving for that goal, which will in turn teach them delayed gratification.  This will get them on the right track to learning how to be self-disciplined with money.  

Lesson #2 – Where Money Comes From

We’ve all heard the parental joke, “Do you think money grows on trees?” but in reality, that brings up a valid point.  Do your kids know where money comes from?  Chances are they know what money is (and that they like it), but if they are young, they probably don’t understand how you get it.  The lesson they need to learn is that money comes from hard work.  Instilling a work ethic at an early age is not only good for the financial side of things, but it is important in all areas of life.  As parents, you need to teach your kids that money isn’t just going to come in without any effort.  A great way to get this lesson started is to give your kids age-appropriate chores and then pay them per job completed.  Set up a chore chart, and equate every job with a certain amount of money.  It’s simple, if the kid does the job, they get the money.  This teaches them the value that income comes from work.

Lesson #3 – How to Say No to Debt

Debt is one of those topics that everyone has different opinions on, but one thing we probably all agree on is that too much debt is bad.  Kids today grow up in a “give me” society.  They want what they want, and there is always a loan or credit card that can give them what they want instantly.  What is perhaps most tragic about this scenario is that kids aren’t being taught the consequences of saying “yes” to debt.  It is up to parents to teach their kids about high interest rates on credit cards and what happens if you don’t pay your debt back.  Another great lesson to teach them is that while you really should try to have the money to pay for everything up front, some debts like student loans and mortgages are not as bad if you have the money to make the payments.  The way to teach them these things is to lead by example.  Talk to them about debt, and show them the ways you stay out of debt or actively pay debt off.  Let them see that this is an important topic to you and more than likely, it will become important to them too.

Lesson #4 – Give Freely When You Can

Giving back is a money lesson that usually isn’t taught in schools.  As important as saving money is, it is also important for kids to learn to give charitably when possible.  There are different ways to teach this lesson to your kids.  First, you can show them how you are giving charitably by involving them in the process.  You could sponsor a kid through an organization and keep their picture where everyone in the house can see it.  When the kids look at it, take that opportunity to talk about all the ways your giving helps that particular person.  Another way to get your kids involved is to let them give out of their own money.  Whenever they receive money, show them how to put a little aside to give towards the family charity project or to your church if you attend one.  Teaching them early that giving, even if all you can give is just a little amount, is important will radically impact the way they view money when they are older.  

All of these lessons are extremely important to raising your child to be responsible with money.  Yes, there are many more money lessons your kids will need to learn over the course of their life, but if you instill these four lessons at an early age, they will be set up to be financially smart in the future.

6 Ways to Teach Kids How to Save Money

 

 

 

 

 

 

One of the most important lessons you can teach your kids is how to deal with money the right way.  Many kids don’t get that lesson growing up, and when they become adults, it causes unnecessary hardship in their lives because they don’t know how to handle certain financial situations that may arise.  A big part of those parental financial lessons should be about saving.  Saving money is a hard to do if you don’t make it into a habit, so it’s important to get kids saving at as early an age as possible.  Here are some fun ways to get your kids on board with saving.

 

The Power of the Piggy

One of the most basic forms of saving is simply the piggy bank.  If your child is younger, start at this level.  When they receive money for their birthday, or if you have them on an allowance, teach them to put some of it (if not all of it) into their bank.  Teach them that they can’t just go into their piggy bank and get money out any time they want.  This is a simple and very effective savings tool.

Divide and Conquer

When you give your kids their allowance each week, give it to them in one dollar bills.  Have jars or envelopes with titles that represent their savings goals.  If they have a specific item they are wanting, label a jar with that item.  There could also be jars for “fun spending” and “giving”.  When your kid gets their money, have them put a little into each jar.  So if your child gets $5 per week, they have five bills and put one in each jar.  Or they can put more into a jar if that goal is more important.  This teaches kids to not only save money, but to work towards a goal and not fall into the habit of immediate gratification.

Open an Account

If your child is a little older, a good option might be to open them a savings account in their name.  They can take their piggy bank stash that they have been so diligently contributing to and convert it to an actual bank account.  This is not only teaching them how adults save money, it’s also teaching them the basics of banking.

Create a Timeline

Some kids get a kick out of knowing when things are going to happen.  If your child is one of them, it may be beneficial to create a timeline of their savings goals.  If they want a lego set that is $50 and they get $5 per week of allowance, chart out how many weeks it will take them to get to their desired $50.  By knowing that it will take them 10 weeks to get to their goal and seeing that mapped out in front of them, it motivates them to keep saving because they can physically see the end result.

The Matching Game

A great way to teach your kids about how 401k’s work it by playing the matching game.  Set some parameters for your child that if they do certain things, you will match their savings contributions.  For example, you could say that if your child decides to put two dollars in their savings jar instead of their usual one, you will also put two dollars in their jar.  If they choose to only put one then they forfeit the match.  You can make the rules anything you want, but the point is to show them how employers match employees contributions to retirement.  This technique also comes in handy when you have older kids who are trying to save for big items like cars or college.  

Lead By Example

Perhaps one of the best ways to teach your kids about saving is to lead by example.  Sometimes kids don’t always listen to what you say, but they watch what you do.  While you don’t have to go into every single detail of your personal finances, it’s good to talk to your children about some aspects of them.  Make sure they know that you have savings goals and that you regularly contribute to them.  Tell them some of your goals and celebrate with them when you hit them.  Give them your personal savings tips and techniques that help you along in your personal finance journey.  Don’t just give them the highlights though.  Tell them about some bumps you have had along the way so that they know that it’s not always a smooth journey to success.  If you let them see that your are practicing what you preach there is no limit to your teaching influence on their finances.

Teaching kids about money isn’t always an easy task, but if you just install the basics of personal finance in them while they are young, you will be setting them up for success in the future.

Same Day ACH Debits – What This Means For You

EFFECTIVE SEPTEMBER 15, 2017

When using your debit card or writing a check, have you gotten used to some lag-time between the transaction and the money clearing your account?

This will be going away – for example, if you pay your cable bill by telephone in the morning, the funds could be cleared from your account before 5:00 the same day.

On September 15, the Federal Reserve will start processing same-day ACH (Automated Clearing House) debits. These can originate from your credit union transactions or if you’re shopping at your local supermarket or other retailer. Whether you choose to use your debit card or a check won’t matter, as large retailers can opt to convert checks to ACH, the same system that clears your debit transactions.

3 Tips to be Prepared

  • Don’t Assume Funds Will Clear the Day After Purchase: Habits can be hard to break. Get in the habit now of planning for funds to clear at the time you swipe your card.
  • Check Your Share Draft Balance: Keeping a low balance can have a negative impact in the event a same-day ACH debit overdraws your account and incurs a fee. Even with overdraft protection, keeping your account balance at a level that supports your spending is the best way to keep your account in the green.
  • Ask Questions at WCU: We are here to help! Leading up to and after this change occurs, watch your statements for additional announcements. And as always, please contact us by phone, email, or stop into our branch to ask any questions that you may have!

More helpful tips for Debit Card holders

  • The credit union has no control over when transactions clear your account. It depends on when the company you scheduled the transaction with batches their transactions for the day. We also don’t control whether your direct deposit will go into your account before any transactions are processed that day.
  • When purchasing gas, if you process your card as debits, the company will often automatically hold $50-$75 even if you don’t purchase that much gas. To avoid this, run your card as credit, or pay at the register.
  • Always make sure that there is money in your account to cover the transaction before making a payment so you don’t overdraw your account. )
  • When reviewing your account balance online, please be sure to look at the “Availableamount, not the “Balance.”
  • Debits, or transactions that you make with a debit card will “hold” the money, but not fully debit it from your account.
  • However, the “*Available” will be the amount that you have to actually spend after the held money has been accounted for *after you have subtracted all other debit transactions you have authorized on your account that may not show as pending or cleared yet. (Example: Checks you have written but have not cleared yet, Debit Card swipes you have made but are not showing as pending yet, Online/Phone Orders or Payments you have made but are not showing as pending yet, ACH debits you have scheduled to come out on a certain date but are not showing as pending or cleared yet, etc.)

What is a debit card hold?

When you use a debit card, the store clerk usually contacts the financial institution that issued your card to get an authorization. When the approval is given, the balance in your checking account is reduced or “blocked” by the amount of the purchase. This is known as a pre-authorization hold. The merchant determines the amount of the hold. The Debit Card Processor establishes the length of time the hold remains in place. Typically the hold stays on your account until the funds are transferred to the merchant from your financial institution, often 3-4 days. If you look at your account online it may show as a pending transaction.

How can a debit card hold create problems?

In a few situations, the dollar amount of the transaction is unknown when an approval is given. This may happen when you check into a hotel room, rent a car*, pay for gas at the pump or use your debit card to pay for your meal at a restaurant. In each of these transactions, the merchant may get an approval for a higher (estimated) amount– allowing for a tip, room service, additional or higher purchase amounts. Let’s say you have $60 in your account when you use your debit card to pay for gas at the pump. Since the purchase amount is unknown when you insert your card, the merchant requests an authorization for $50. The authorization causes a hold to be placed on your account for $50 and your available balance is reduced to $10. If you only purchased $20 in gas you may believe you have $40 available in your account. Unless you understand how a hold affects your account, your debit card could be declined in future transactions. This can be embarrassing and inconvenient. It could also be costly. If checks or other transactions are processed before the hold is released you may overdraw your account and incur overdraft fees.

Example of a Debit Card Transaction Hold

If you have a balance of $100 in your account and use a debit card to make a purchase at a retail store for $30, your available balance will immediately decrease to $70. This is because the merchant has obtained an authorization hold from your credit union by swiping the card through its credit card terminal. The actual balance with the credit union is still $100, because the merchant has not actually collected the funds in question. Unless this authorization hold expires without being finalized, you cannot access the held amount.

The actual balance will not be reduced until the merchant submits their batch of transactions to transfer the funds, which may take up to three business days. The best way to avoid any difficulties with debit card holds is to closely and constantly monitor your account and to read any mail from your credit union that might change the rules and regulations of card use.

How can you avoid these problems?

  • When you use your debit card in a situation where the merchant may estimate the charge (hotels, car rental*, paying for gas at the pump, restaurants), the following tips may help you avoid some frustration:
  • When a business asks for your card in advance of service – ask if the company will request a pre-authorization hold, the amount of the hold, and how the amount is determined. Be sure the hold won’t exceed your account balance.
  • Pay the charges with the same card you used at the beginning of the transaction. Ask the clerk when the hold will be removed.
  • Prior to making a purchase that will involve a payment with a different card, by cash, or by check, inform the clerk of the different form of payment and inquire about their policy on reversing holds.
  • Ask your financial institution if they offer an overdraft line of credit or another product that will cover overdrafts. Learn how it would work and how much it costs. Look for a plan that automatically covers the overdraft and does not involve a separate decision by the financial institution as to whether or not to pay the overdraft each time. There may be a fee or interest charged on this plan. However, the cost is usually less than an overdraft charge and the item would be paid.
  • Pay inside not at the pump.
  • Consider using another method of payment (cash, check or credit card).

Tips for Debit Card Safety

  • Immediately sign the back of your card when you receive it.
  • Treat your card like cash, keep it in a safe place.
  • Thoroughly review and balance your account statements.
  • If you have been given a PIN (personal identification number), memorize it — never write it down.
  • When choosing a PIN, avoid obvious choices such as your date of birth or telephone number.
  • Never carry your PIN with your card.
  • Do not tell anyone your PIN.
  • When entering a PIN, position yourself to shield the keypad so that others cannot observe your numbers.
  • When you no longer need your receipts or statements, don’t simply discard them– shred them.

*Many car rental agencies will not accept debit cards.

3 Types of Retirement Accounts

Saving for retirement is a very smart financial decision to make.  It may seem like a long way off to younger people, but it is very important to plan for your future.  It becomes even clearer to people nearing the age of retirement just how important retirement accounts are.  

There are three popular types of retirement accounts to consider when thinking about where to put your money for your future:  401k, Traditional IRA and Roth IRAs.  Let’s take a look at each type with a little more detail.

401k

Perhaps the most straightforward of the three is the 401k.  The 401k is a retirement plan that allows eligible employees of a company to save for their retirement on a tax deferred basis. The contributions that the employees make towards their account are deducted from their salary pre-tax.  Only employers can sponsor a 401k account, an individual can’t open one up on their own.

Traditional IRA

A Traditional IRA account is for anyone with an earned income that is under the age of 70 ½ .  With this kind of account your contributions are tax-deductible on your state and federal tax returns the year you make the contributions.  You can only contribute $5,500 ($6,500 if you’re age 50 or older) per year with this kind of account.  When you withdraw your money, it is taxed at normal rates.  When you get to the age of 70 ½ , you must take at least a minimum mandatory withdrawal from your account whether you need the money or not.

Roth IRA

A Roth IRA is a retirement account that allows a person to save for retirement as long as they are under certain income brackets.  If you are single and make under $133,000 per year, you can open a Roth IRA.  For married couples, your earned income must be under $196,000 per year.  Like the traditional IRA, you can only contribute $5,500 ($6,500 if you’re age 50 or older) per year. With Roth IRA accounts, both the earnings on the account and the withdrawals after age 59 ½ are tax-free.  You don’t ever have to withdraw your money from a Roth IRA account if you don’t want to.  If you have enough income from other places, you could let your Roth IRA grow tax-free for most of your life, making the account an ideal wealth transfer tool.

There is a lot to consider when thinking about saving for retirement.  Different accounts hold different pros and cons that depend on your individual needs.  Always research and be knowledgeable about how you are going to save for your future.