Three ways to help kids learn how to manage finances

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Posted at 2:10 PM, Apr 29, 2021
and last updated 2021-04-29 18:20:46-04

NORFOLK, Va. - For many people, their first real experience with budgeting and finances doesn't come until they're 18 and moving out on their own.

But parents should start having these conversations much earlier, according to Nathalia Daguano Artus, Director of Community Development and Reinvestment at Atlantic Union Bank.

She says research from the University of Cambridge suggests we start forming spending and saving habits early, and they may set by age seven.

So, how young can you start teaching your kids?

Daguano Artus says even 2-year-olds can start picking up basic concepts.

"Just include them as part of the process," Daguano Artus said.

That means explaining what you're doing at the store, whether it's buying groceries or a toy.

Once kids are in elementary or middle school, they can get more hands on with something called the "three jar rule."

"That's pretty much the 50/30/20 rule. So, you would spend, coming from your allowance, 50% on things that you need, 30% on things that you want and 20% you would direct towards savings or investment. It's a really basic budgeting tool that can be used by any age," said Daguano Artus.

High schoolers can take it a step further.

If they have their own job, they can open a Roth IRA or 529 savings account.

Related: Help children learn the habit of budgeting and saving money at an early age

"You as a parent can be the custodian so that you allow them to manage their own money and also make their own mistakes. There's nothing that helps kids to learn better than to make their own mistakes and take the lessons from it," said Daguano Artus.

The most important part no matter the age, she says keep it fun.

You can see more resources for learning how to manage money by clicking here.