Teaching Valuable Lessons with Nickels and Dimes – from WA529
Children’s dreams are limitless and often full of imagination and wonder. Many children dream of becoming firefighters, teachers, veterinarians, artists, writers or astronauts. Some children never waver from their dreams, while other kids’ dreams evolve as they grow up. Either way, the path to achieving their dream will likely require hard work, a higher education path and a plan to cover the costs associated with it. At Washington Education Savings Plans (WA529), we believe it is never too early (or too late) to start saving for a child’s future.
April is recognized as National Financial Literacy Month. It highlights the importance of teaching children about money and how to manage it. Financial Literacy Month is a great reminder to have meaningful conversations with kids about money. Early in life, children may notice money and observe basic concepts like where we keep it, when and how we use it, and other money habits we model without even knowing it—like saving. There are so many clever ways and resources to teach children basic money concepts and incorporate valuable financial lessons into their daily lives. By teaching children about the significance of money in our daily lives, we help them prepare for their dreams.
Start with Basic Money Concepts
Children are naturally curious about everything, including money. Turning their curiosity into tangible life lessons can be as simple as showing them coins and dollars from their pockets or wallets and talking about the value of each one.
Recognizing different coins and bills and how much each is worth is a priceless first step to a child’s financial awareness. Playing matching games with money from toys and board games is also a great way for children to learn about money. Engaging them in a game of “shopping” for items in your home that they relate to and showing them how many dollars and coins it takes to “buy” each item is another fun and tangible way to teach them basic money concepts.
Financial Lessons in Daily Life
Nearly every outing we take with our children can be turned into a conversation about money. It only takes a few minutes to discuss if the outing is free (a visit to the library or the park) or if it involves spending money (a visit to the zoo, the grocery store or the dentist). Eventually, conversations will get deeper and more involved. For example, you can discuss that while the visit to the park is free, transportation to get there and parking are not necessarily free.
Another important financial lesson is helping kids understand the difference between things they need and things they want. Understanding needs and wants is a key element that guides spending decisions. It leads to conversations about earning money and whether we need to use the money right away or save it. Children’s books, board games, educational workbooks, virtual games and websites or apps can be excellent resources for inspiring these conversations.
Children also observe our work routines and notice other people working. The concept of earning money is another valuable financial lesson to teach. Talking with our kids about how our jobs help us earn money to pay for family needs (and wants) helps them understand the value of money.
Model Good Money Habits
The timeless phrase “lead by example” applies well to teaching our children money management. Our kids learn a lot by observing. If they see us budgeting, saving and making thoughtful spending decisions, they will likely follow our lead.
Once children begin to earn money, it is a perfect opportunity to talk about managing their money and saving for short-term and long-term goals. Teaching them to put aside a portion of their money for future needs can be as simple as encouraging them to think about what they want or need and how much they need to save to buy it. Offer savings tips like, “If you save $3 every week, how much will you have in 5 weeks?”.
A great method for teaching kids money management is the “money jar” system. Have them create one jar for spending, one for saving and one for giving. When they earn an allowance or receive gift money, encourage them to contribute to each category.
Saving for the path to their dreams with GET Prepaid Tuition Plan and WA529 Invest
At Washington Education Savings Plans (WA529), our mission is to help families save for educational expenses and avoid future debt. WA529 offers two (2) state-sponsored 529 savings plan options, GET Prepaid Tuition Plan and WA529 Invest Savings Plan, to help families save for future college and career training costs in a tax-advantaged way. One benefit of GET is that it lets families prepay for future college tuition at today’s prices, which can help protect against inflation and rising college costs. WA529 Invest allows families to add flexibility to their savings and choose from multiple investment options based on their risk tolerance.
Opening a GET or WA529 Invest account and contributing to it regularly can help kids visualize how savings add up over time. Children are more likely to pursue higher education when they know they have financial resources set aside to help them achieve their dreams. By teaching kids about money and involving them in saving for their higher education, we help them develop strong financial habits that will serve them well into adulthood.
Visit 529.wa.gov for more information about opening a GET or WA529 Invest Education Savings Plan.
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