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The Top 5 Things Kids Need to Know About Money

One of the most valuable things you can pass on to your kids is a healthy attitude about money. We asked Millbury Savings Bank employees, who are also parents and grandparents, to share some of the financial wisdom they’ve passed on to their kids and grandkids. Here are their thoughts:

1. Money doesn’t grow on trees…or in ATMs
Your kids see credit cards sitting in your wallet and cash spitting out of ATMs. Do they have a real grasp on how hard responsible adults work to earn (and hopefully save) money in order to afford a house, cars, and other necessities? As one MSB employee said, “There are no real shortcuts to wealth. It’s hard work that helps you accumulate wealth over the years.”

2. Save for a rainy day
Or as one MSB employee put it, “Don’t let money burn a hole in your pocket!” When kids get their first allowance or paycheck, their inclination is to buy, buy, buy. But instilling the savings habit in them early on can make a world of difference.

One MSB employee allows her first-grader to spend half her allowance but insists the other half must be put in the bank in order to drive home the importance of saving for the future. Another MSB employee says her 17-year-old grandson learned the hard way about “rainy day funds” when his truck needed some unexpected repairs. “The rains came, and he had no money to make the repairs,” she recalls. “That was a difficult lesson, but one well-learned.”

3. Be careful with credit
Credit cards and loans are enticing to kids who want the latest and greatest gadget or gizmo, and who think buying on credit is a way to get it now. But, often, kids don’t recognize credit as a serious obligation that has to paid back over months or even years — often times for much longer than the item they purchased lasts.

One MSB employee says, “My son receives at least three or four credit card offers a week in the mail and we shred them right away!” Another said, “When my son bought his first motorcycle, I sat down and showed him how much of his monthly loan payment was going to principal and how much to interest. It was eye-opening!”

4. Live within, or even well below, your means
Several MSB staffers cited this as an important example to set for your children, and several referenced the current housing and credit crisis as proof of what can happen when you stretch beyond your means to “keep up with the Joneses.”

One MSB employee said he plans someday to talk to his now-baby daughter about the current economic crisis this way, “When daddy was your age, he watched the Joneses lose their house…and their car…and their big fancy TV.”

5. Above all, money isn’t everything.
With media coverage and political discussion so squarely focused on the economy, the stock market, interest rates — in short, all things money, money, money — kids can easily wind up thinking that that’s all that matters in life. But several of our employees were quick to point out that it’s equally important to teach kids about money’s place in life — well behind such things as family, health, love, and friendships — and to ensure the old adage, “Money doesn’t buy happiness” is alive and well!


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