Parents take pride in the ability to give their children things that make them happy. Among the best “gifts” parents can give are the lessons of money management.

Young Children

Begin when kids are as young as 3. Since they learn by observing, take them shopping and help them compare prices of products. Ask, “Which one costs less and saves us money?” Parents might also consider giving youngsters a transparent piggy bank for capturing loose change so they can watch their savings grow.

When children are older, a weekly allowance can teach them how to be good stewards of their money, along with these principles:

  • Identify wants vs. needs. When you spend freely, you’re not managing your money.
  • Save, then spend. This helps avoid short or long-term debt.
  • Value working for money. When you earn your money, you think more carefully about spending.
  • Comparison shop. Research saves money.

Like adults, children need to diversify. Divide money into three financial categories: saving, spending and giving. Income can be divided between saving and spending as parents see fit, and contributions can be made to the “giving” jar. A good rule of thumb for giving is 10 percent, and provides a great way for parents to start the conversation about giving to others.

It won’t take long for the power of the purse to teach children to save before they spend. With age comes the ability to determine whether saving for the “next big thing” is worth skipping day-to-day purchases that bring short-term satisfaction.

Parents may consider starting a savings account at the bank for the “savings” portion of their kids allowances to teach them how the bank and interest work. Taking kids to the bank to deposit the money themselves and watching it grow every month can encourage saving habits for years to come.

College Students

When the apron strings are cut and the purse strings tighten on the first day of college, teenagers get a crash course in budgeting. If they haven’t learned by now, these young adults will see how quickly the little things add up.

It’s important to look for money-saving and money-making opportunities. Online coupons, generic brand items, student discounts and generally living with less should be the norm.

Opportunities to sell items such as old textbooks or clothes, and to work a part-time job can help build a few extra dollars. Choosing the cheaper route by eating in, streaming movies at home or finding free entertainment also helps the budget.

Students who work should have their bank automate their paychecks so savings are set aside first. If they have a savings account from childhood, they can add to this and continue to grow that fund so when post-graduation expenses hit they are prepared.

The biggest pitfall for college students is relying on credit cards. This is a mistake that can hurt them for years to come as credit cards often result in high, unmanageable debt, paving the way for bad credit. Paying in cash helps avoid creating debt and is a reminder of how quickly money disappears.

Spending mistakes are inevitable but they can be good lessons. A commitment to save first, save early, save consistently and to track spending are among the best practices for developing financial acumen for consumers of any age.

Faviola Alba is the Senior Vice President and Consumer Loan Manager for Arvest Bank in central Arkansas. She and her husband Jose G. Alba III live in Bryant and have three kids, Abigail, Faviola and Ana Isabelle. She and her family love to travel and visit new places. They balance their family time between the kids’ activities in fashion shows and rock band performances and enjoying the outdoors.