As parents, we teach our children a variety of things that they will need to know when they become adults. One of them should be the value of money and how to save. It’s never too early to teach good savings habits to children so they can make sound financial decisions as teenagers and adults.
With the use of savings accounts, you can start these financial lessons early and share in the excitement as their savings grow over time. In this blog, we will discuss the ways you can teach your children how to save and what you can do to get them started on their savings journey.
Where to Save
Some of us were introduced to saving money with a piggy bank. We were taught to drop our coins and bills into the little slot on the piggy’s back and not touch the money (if we could get it out) until we needed it for something important. While piggy banks remain a fun and practical way to save for young children, there are other savings tools available for older kids, and they start with savings accounts.
You can find basic savings accounts at most credit unions. Start with your preferred financial institution to see what youth or minor savings accounts are available. Some offer accounts based on age groups, such as for those ages 12 and under or for teens ages 16 to 18.
Generally, these accounts are free to open with no minimum balance required. Once these accountholders reach age 18, the account is converted to a basic savings account.
Lessons on Savings and Spending
Once they’ve got a place to save their money, start with the lessons on savings and spending. Begin by providing money upfront or via a weekly or monthly allowance in return for completed chores, good grades, good behavior or some other suitable benchmark.
While they may be eager to spend the money, explain the difference between needs and wants. Emphasize how saving some of their money now will mean that they will have more available later. Teach them the importance of saving for a rainy day when money may not be so easy to get from Mom and Dad.
For older children, you can expand the talk about needs and wants to cover how money pays for necessities such as food, shelter, clothing, health care and education. Discuss how other things, such as a new smartphone, movie tickets, name brand clothing, candy or bubble, are considered wants which take a lower priority in the family budget. Explain how saving money can help them get the things they want over time.
Track Your Spending and Saving
Once you get your child saving money, keep track of the deposits and share in the excitement as their balance rises. Encourage them to save by teaching them to make deposits themselves at your credit union. Having that face-to-face transaction with the teller may spark more confidence in saving and in how basic banking works.
For older children with tech savvy skills, you can show them how online banking works. Demonstrate how they can view their savings account online at any time. Some financial institutions offer a mobile deposit feature on their mobile app that lets you make deposits by taking a picture of a check. This can come in handy after birthdays and holidays by showing your kids how easy it is to deposit their gift checks.
Set Goals and Keep Them Engaged
Setting a goal can help keep your children focused on saving. Show them how saving for a long-term purchase, such as a new gaming console, bike or phone, is possible with a little time. Help them identify an appropriate goal and create a plan to get there. For example, if they know it will take eight months to buy a new gaming console, they may be more motivated to find other ways to earn money to reach their goal faster.
Goal-setting will provide excitement to save as well as teach kids that, through budgeting, saving and patience, they can achieve a purchasing goal. This is an important lesson that can be used as an adult to improve their financial wellness.
The Importance of Financial Education
Having a hands-on approach to teaching children financial literacy is important, especially in the United States where not all grade schools teach children how to manage money. As a parent, you are the most likely person to positively influence your child’s view of money, so talk openly about it. According to Investopedia, a 2022 survey conducted by T. Rowe Price found that 37% of parents were reluctant to talk about money with kids.
To instill healthy spending and saving behaviors in children, parents must work on educating them about personal finance. Teaching them the importance of living within their means will pay dividends as adults. Fortunately, financial institutions such as Travis Credit Union are similarly focused on financial literacy for all and have programs and resources to help boost their money IQ.
How Can TCU Help
Travis Credit Union offers youth savings accounts to help kids save money, as well as other savings accounts for when they become adults. TCU also offers Generation Wealth, an innovative financial education program for those ages 13 to 18 where kids learn the importance of budgeting and the impact of their financial decisions. Learning how to save money is one of the four financial pillars that can help improve your financial wellness. Learn how you can better plan, save, spend and borrow by visiting the TCU Financial Wellness Hub.