Long before her bike sheds its training wheels, your child understands the concept of money. She observes you using the ATM, purchasing groceries and paying bills. To prepare her for a financially responsible adulthood, it's never too early to foster a healthy attitude about spending, savings, and credit.
Start with the Basics
How can we help our children learn the basics of financial management? When they end up with a larger denomination of cash (say as a birthday gift from a relative), calculate the change for the bill or help by budgeting with an envelope system, as these smaller lessons can contribute to a larger understanding of financial management.
Think about including your children in your family's budgeting process. Ask your child to help tally the cost of the grocery trip while you're going down the aisles. Work with your child before your shopping trip to set a spending limit and avoid impulse purchases.
Set Up a 529 College Savings Plan
Another way you can engage your child is by setting up a 529 College Savings Plan. Plans can be established with small initial contributions. A systematic monthly investment for as little as $50 then builds the plan. These plans can offer significant tax benefits when used for higher education.
Including your child in the process of reviewing these Plan account statements provides you the opportunity to teach her about many of the basics of investing: starting early, paying yourself first, systematic investing, dollar-cost-averaging, fluctuation and market risk, mutual funds, and diversification. With the hands-on engagement, she'll come to understand that, just like riding a bike, having her money grow comes with discipline and patience.
We're Here to Help
Our CFS* Financial Advisors are available to answer questions and provide guidance to our members. They are available by calling 415.674.4845 (Dennis) or 415.674.4846 (Stephen).*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. SF Fire Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.