March is Credit Education Month, and First Fidelity Bank is offering tips to Oklahomans for educating children of different ages about finances. According to the Association for Financial Counseling and Planning Education, habits that start at a young age can cause financial problems unless young people receive financial education.
“It is important for children to learn about finances early on so they are able to practice healthy spending and budgeting habits throughout their lives,” said Suzanne Symcox, executive vice president for First Fidelity Bank. “The earlier children learn about money, the more prepared they will be to manage their finances in a responsible manner.”
At times, parents can be unsure about how to educate their children about finances. To help, First Fidelity Bank offers the following tips for parents to use to talk to their children at different ages:
- Ages 3-5: You have to have money to buy things. For young children, it is important to keep financial lessons simple and engaging. Explaining what you are doing when paying for everyday objects helps make the connection between exchanging money for goods. Getting their help counting out dollar bills or showing how many pennies make up a larger coin are just a few activities that can help demonstrate how money works and its value.
- Ages 6-10: You have to make choices about how you spend your money. As children mature, you can have more advanced discussions about money, including why it is good to shop around for the best deal or how you can protect and invest your money for the long-term. They may need help setting up a savings account and understanding why it is important to think both long and short-term about ways to spend money wisely.
- Ages 11-13: Start saving what you earn. The more money you save, the more you will have in the long run. This age group often finds itself with money to burn due to allowances, chores or monetary gifts. It is important to talk about ways to spend wisely now, while also setting some aside for a future purchase. When you are ready to make a purchase, discuss how to practice safe spending, especially if buying something online. According to the Identity Theft Resource Center, identity theft continues to be one of the fastest growing crimes in the United States. This is also a great age for discussing how accidents and emergencies in the future are inevitable and potentially costly and the importance of savings.
- Ages 14-18: College is expensive, so work together to compare costs and set a budget. Even with student loans, college is a significant financial investment. Selecting a college is a great opportunity to discuss financial implications of various options and also to prepare for any upcoming responsibilities, such as managing a debit or credit card responsibly. It is important to remember that credit cards do not replace cash. If you do not have the cash to pay for an item, it is not wise to make the purchase. Credit card debt is easy for a college student to get, but it can be very difficult to overcome.
- Ages 18 and above: Form responsible budgeting habits early. The cost of living rises the older you get, which is why the lessons of budgeting and using credit responsibly are critical for laying a solid financial foundation. Credit cards can become a burden on top of other expenses like college, rent, gas, car insurance and recreational spending. Health insurance is another expense that should be considered as young adults become more independent. Helping young adults develop these life skills will pay dividends for the rest of their lives.
About First Fidelity Bank
First Fidelity Bank, N.A., is a locally owned full-service community bank established in 1920. As a family-owned, nationally chartered financial institution, the bank has 28 offices serving the Oklahoma City, Tulsa, Phoenix and Scottsdale, Ariz. markets. For more information, visit www.ffb.com.