Tim Connolly

How to Teach Young Kids About Money So It Sticks with Them

Posted on May 21, 2022 by Tim Connolly

“Money doesn’t grow on trees.”

This is the nugget of wisdom that so many of us were handed as children, and often the financial literacy education ended there. A new survey found that one in four U.S adults with children under 18 said their parents provided no money lessons as a child.

In the case of money matters, ignorance is not bliss, and what you don’t know can hurt you. Research shows that children benefit from learning about how money works, beginning at a very young age, with some schools stepping up to tackle the issue in the classroom.

How can parents teach financial wisdom to their children in a practical way that will benefit them for their whole lives?

We’ve compiled a list of tips from money experts — many of whom are also parents.

Explain where the money comes from

“When you’re teaching kids about money, it’s important to teach them where it comes from. Money does not just come from mom and dad’s wallet,” says Rachel Cruze, personal finance expert and the co-author of “Smart Money Smart Kids: Raising the Next Generation to Win with Money.” “When you work, you get paid. When you don’t, you don’t get paid.”

The key is to repeatedly demonstrate and demystify the relationship between work and money.

Preach the three principles: giving, saving, and spending

“Once you’ve established that money comes from work, I recommend teaching your kids three basic principles when it comes to money — giving, saving, and spending,” says Cruze.

“Giving is one of the most important of the three categories because you’re teaching them to feel the impact of helping others at a young age. That’s invaluable,” Cruze continues. “As for saving and spending, encourage your child to set aside some of their money for savings and some to spend each time they get paid. Remind them that once their money is gone, it’s gone. And yes, your kids will make mistakes, but they should make those mistakes under the safety of your roof.”

Have your child physically organize cash with three piggy banks

Kids (especially young ones) need tangible ways to understand abstract concepts, so it’s important to not just explain these three money principles, but give them concrete tools to practice them.

“Instead of just having one piggy bank for your child, get three, and label one ‘spend,’ one ‘save,’ and one ‘give’,” says Logan Allec, CPA and founder of the personal finance site Money Done Right. “Any time your child gets the money — allowance, payment for completing a task, birthday money, etc., — encourage them to split the money up between all three banks. The key to this being educational is to allow your child to choose how they split the money, as well as what they do with it.”

This exercise is not only helpful in getting kids confident in money matters, but it also provides an opportunity for parents to have meaningful conversations with their kids about money management.

“Talk with them about both what they will do with their money as well as how they could have split their money up differently if an appropriate situation arises,” says Allen.”Ultimately, though, the decision should be up to your child.”

FINANCIAL LITERACY FOR KINDERGARTEN

Posted on May 21, 2022 by Tim Connolly

Financial literacy for kindergarten is the first step to financial education for kids. Kids at the kindergarten stage are eligible to learn little things about finance as well as how to manage these finances. Kindergarten kids at this stage should learn about coins wants and needs as well as how to spend money.

Firstly your child should understand what money is and its value. Start with the money basics like introducing coins and bills. And helping her understand the ranks of these bills by letting her arrange her wallet sometimes. Start allowing your child to pay and receive changes for little transactions. Also, take her to banks for familiarity on the purpose of visiting banks and who works in a bank.

Secondly, parents help their children make money. They are ways a child could make petty money at home. If parents knew these ways and could help them. A kid at kindergarten should start receiving allowances from their parents depending on their parent’s earnings.

It mustn’t be weekly allowances. But at least 2 weeks intervals would help their account save as well as try soliciting their services. When your child does some extra work at home that isn’t theirs. You as a parent teach a child to save money. Should solicit their service so they can be able to save. Including a lot of practical activities in teaching financial literacy for kindergarten is the best method.

Financial literacy for kindergarten will be the best implemented through fun games. While adding little money facts that are fun and sometimes rhyming so they enjoy it. Literacy in finance for kindergarten students should also be implemented with patience. As the kids will find all of it new at first.

Lastly, start up a micro-business for your child. Like a lemonade stand or a snack table even a hot apple juice cider stop. The business will help your kid earn money and also learn how to manage his or her money. This is the most important step in financial literacy for kindergarten. Because it is practical, so more fun.

Financial responsibility

Financial literacy for kindergarten may not be so understanding for the child. But he or she will that money has value. When a child starts earning money no matter how little it is. It will be exciting for him or her to save money and share as well. Meanwhile earning this money, kids must learn to be honest about their finances. As such, you as a parent need to be true to your finances as well.

For example when you need to make a difficult financial decision. Teach him or her or your reasons for your decision. As well as make the child understand that money is valuable but it isn’t loving or safe.

Financial literacy for kindergarten is the foundation of these kids to the knowledge of finance. Therefore, it should be taken seriously. Discuss making life choices with your kid then link them to making financial choices with their money. They should always go for a better choice or seek advice. Before making choices so they don’t end up making the wrong choices.

financial literacy

FINANCIAL LITERACY FOR KIDS

Posted on May 21, 2022 by Tim Connolly

The statement financial education for kids can be understood as the ability of kids to effectively use and understand various financial skills like personal financial management, saving and spending, investing, and budgeting. A kid lacking these financial skills is called financial illiteracy in kids.

Kids need to be financially literate for a solid foundation for their savings of education, starting up a business or even running the business also retirement, and using debt responsibly. When they have little or growing knowledge of these ideas. It is know known as financial literacy for kids.

Organizations are fast developing this is why it is important for kids to understand various credit products and how they are put in use like credit cards, mortgages, and student loans. Other important products too like health insurance and self-directed investment accounts are financial products kids need to be aware of.

The rate of financial illiteracy is fast rising in countries, that is why teaching these kids about money at an early stage is important to be in school and also at home. Parents should take charge of teaching their children about money not only for their benefit but also to lead them away from the path of debt their elders have taken to.

In this post, we will discuss the basic financial lessons for each child of a range of ages. To influence their financial behavior as well as grow savers, givers, investors, and conscious consumers.

TEACHING KIDS ABOUT MONEY

Kids of every age limit have to learn about money and saving in their little way. Parents should their kids with understanding lessons and set activities to aid kids to understand finance in their way.

Teaching kids about money is a step every family should set up for their kids early enough, so before they are of age, they can understand how to go about their finance and giving. We will discuss in this post different activities and lessons every parent should startup for their kids in a particular age range.

Age 3-5 years

Teaching kids within this age limit about money is important. Parents need to teach kids at this age the lesson that if they need something, they would have to wait, save up and buy it. Kids should be made to understand that saving up for something you need is the way it should.

For a better understanding of this lesson, parents should buy three jars for kids within this age limit. Label the jars saving, spending, or sharing, have he or she save up for a particular need like toy but not so expensive one so they can be able to afford it. They could spend their little savings on candies and stickers while they save for their need. However little allowances from parents would help to encourage them on saving. While the sharing jar would be put in use for any friend in need.

Another activity could be as simple as educating them to be patient in life to get what they want. While waiting for their turn on a swing would be a good time to teach and make them understand this lesson.

Age 6-10 years

When the first lesson is understood by a kid, parents and teachers need to teach kids within this age limit how to spend their money. Choices on how and what to spend their money on are lessons for kids in this age bracket.

They still need to continue their saving, spending and sharing lessons while moving on to the decisions of how to spend their money. To achieve this lesson, take your kids to the store say aloud your decisions in spending while you shop as well as ask for their opinions. This practice indirectly teaches the kid about money.

Say aloud decisions like do we need this product, can we get it cheaper at some other place, is a shop running a discount sale then we can get 2 instead of one.

Explain to your child why they need to go for a cheaper product that tastes the same as a brand product but the branded ones are costly, give in a small amount of money to spend in the supermarket and see how he or she goes about making decisions in his or her spending.

Age 11-13

At this age, a kid could move from short-term saves to saving for long-term items. Introduction to compound interest will be essential at this age for these kids. Let them understand interest on savings as well as past savings.

Let your child engage in compound interest calculations and see how much he or she will earn if she invests in a certain amount and it grows on a certain interest. Saving up money for long-term items might be a bit newer to him since he has been saving up for only short-term needs.

The desire for an item like an iPod will make her give up a certain temporary need for a bigger purpose which is the iPod. Enable your child to know the importance of starting savings early and also let them learn from individuals who have benefitted from using the compound interest.

Age 14-18 years

Parents start the topic of what a Child’s college would be like and as well put in their yearly contributions to their college funds by the Child’s ninth grade.

Being honest at an early stage about what your family can afford will the child will enable him to make a better choice for their college. You can look into private schools that are generous with financial aid or government grants and scholarships even loans that will be beneficial for your child.

Parents should make their kids get a part-time jobs and even make them the sole person in discussing and comparing tuition for different colleges.

Age 18+

An average youth is always smooth in spending, so it’s easy for him or her to hop into credit card debt. As a parent, you should advise your child on pilling up debit together with loans to pay up to themselves.

Also, another disadvantage to this credit card debt is the fact that it could affect your child’s credit card history which means buying a car or house or even getting employment would be a hard one. So it’s really important parents teach their children how to be responsible with their credit cards.

Make your child understand that any credit card a parent cosigns automatically affects the parent’s credit history. In this case, parents should guide their children to get credit cards with low interest per annum.

Teach an 18+-year-old child how to budget its finance to save up for emergency savings. Emergencies are occurrences that are beyond our control so in order not to be taken unaware and disorganize our finance you should make provision for these occurrences.

Uncategorized

Teaching Money to Kids: The Basics

Posted on May 20, 2022 by Tim Connolly

Think about your financial knowledge. How did your parents talk about money with you? What financial lessons did you learn the hard way? You may feel that talking to kids about money is uncomfortable. Perhaps you feel unqualified, or don’t want to teach them the wrong ideas. But you are not alone. Nearly half of all parents are somewhat or very reluctant to talk about money with their kids.

But imagine the kind of people you want your children to be. How do they handle their money? Do they have the same habits as you? How will they make major life decisions?

How your child answers these questions in the future will depend on a lot of factors. One of the most important ways you can help your child make the right decisions is to help them be comfortable and competent when talking about money.

Below is a list of the essential conversations to have with your kids, ideas for teaching kids about money (at any age), and some insight into how the parents talk to their kids about money.

First, A Financial Pep Talk for Parents

One of the biggest reasons why financial literacy is such a challenge in the US is because it’s not always normal to talk about, let alone talk about with your kids. Here are some of the common reasons why you might be nervous to talk money with your kids, but why you should anyway:

It’s rude to talk about money.

You may have been taught that it’s rude to talk about money, and perhaps you still hold that notion.

In his book, The Opposite of Spoiled: How to Talk to Kids About Money, personal finance writer Ron Lieber writes that the silence around money can come from several emotions including, modesty, shame, envy, and fear. While these emotions about money are very real for a lot of people, that doesn’t have to be the case for your kids, if you discuss it with care.

I can’t talk to my kids about money; I barely know what I’m doing.

More than 40% of parents have never had any formal financial education. Wherever you are in your financial journey, you still have an opportunity to set your kids on the right path early.

I don’t want my kids to see how much we’re struggling.

This is a tough one. Letting your kids in on the realities of your finances can feel like taking off the superhero costume.

Personal finance writer Beth Kobliner says that it’s natural that parents may feel nervous talking to kids about their money. However, kids just want to be reassured that everything is going to be okay. They don’t need all the details about your circumstances. Instead, help them understand why you’re having these tough conversations about money and the reasoning behind your good decisions.

It’s too late to get started.

Dear parent, who may be feeling like the worst parent ever because you haven’t talked to your kids about the inner workings of your 401(k), do not fret…

While financial experts agree that starting children off early leads to better financial literacy later, arming your kids with the knowledge to make sound financial decisions can come at any age.

financial education, Kids and Money

How to Teach Kids About Money

Posted on May 20, 2022 by Tim Connolly

It’s important to teach kids about money from a young age. But it can seem daunting if you weren’t taught how to be a financially responsible grown-up. Here are fantastic tips for how to teach kids about money while they are young.

Start early

It’s never too early to start teaching your kids about money. You can begin by helping them understand the value of a dollar. Explain to them basic concepts like a dollar is worth more than a quarter, and that a dime is worth more than a nickel.

Help them understand that some items are worth more money than others. For instance, explain that a new toy may cost five dollars, while a used toy may only cost one dollar.

Use real-world examples

When you’re teaching your kids about money, use real-world examples to help them understand. For example, when you’re at the grocery store, let them know how much each item costs and why you’re buying it.

If you’re going out to eat, explain how much the bill will be and why you’re paying it. Use everyday situations to help kids understand the value of money.

Help them understand the value of money

Most kids learn about money in one of two ways: either their parents teach them about it, or they learn the hard way by making mistakes with their own money.

Kids need to understand that money “doesn’t grow on trees”. Explain to them where the money comes from and how hard people have to work to earn it.

Help them see the connection between work and earnings by taking them with you to work, or assigning them age-appropriate chores around the house that come with a monetary reward.

Start early with an allowance

Teaching kids about spending and saving is easier when they have their own money to work with. Start them off with a small allowance that they can use to make choices about how to spend or save their money.

As they get older, you can increase the amount of their allowance and give them more complex tasks, like budgeting for a month or working out a savings plan.

Set up a budget

One of the biggest mistakes of people who make poor financial decisions or get heavily into debt is that they never learned how to make a budget and stick to it.

One of the most crucial things kids should learn about how to manage their money is creating a budget. Help them understand what a budget is and how to make one.

But explaining budgeting to kids can be tricky – how do you make it interesting and understandable for them?

Break budgeting down into simple terms that kids can understand. For example, explain that a budget is like a spending plan – it’s a way to make sure you’re not going over your limits on what you can afford.

The next step could be to help them set up their budget. This can be as simple as writing down how much money they have and what they want to spend it on. Then, using their earned allowance, have them track their expenses over some time to see where their money goes.

smart money habits

How to teach your kids about smart money habits from home

Posted on May 20, 2022 by Tim Connolly

With extra time at home with your kids these days, now could be a great time to try your hand at starting a conversation about money. We know it can feel daunting to start the process of teaching kids about money however, showing children how to manage money doesn’t have to be complicated or uncomfortable. Start early and kick things off with the basics!

Getting your kids involved in money management and financial responsibility:

Money doesn’t grow on trees
For kids, it’s important to clarify the relationship between work and money. Sadly, money doesn’t magically appear in our wallets. When kids see cash pop out of the ATM, they may not understand that money is an earned and finite resource. Let your children know that adults work hard to earn money, and that bank accounts are important tools that keep money safe.

Make it a game: Wants vs. Needs
The next time you’re shopping with your child and adding things to your cart (even if it’s online!), ask them if the item is a “want” or a “need.” Let them share what they think, then give them your answer. Explain how you decide to use your money, and define wants and needs in simple, easy-to-understand terms. It’s important to teach kids that it’s okay and normal to have wants, but you can’t forget to always balance what you want with what you truly need.

Practice budgeting together
Give your child a budget—for your family groceries or a home project—and have them create a list of wants and needs with costs listed for each item. Have them make a “buy” list that doesn’t exceed the budget. Ask them how they came up with their list—did they include everything they need? How did they choose what else could fit in? The lesson learned is: It’s important to get what matters most before buying unnecessary wants on the list.

Saving, spending, and giving
Knowing where your money is going is an essential part of the budgeting process. To keep things simple, break things up into three categories for your child: Savings (money they won’t spend, because it’s important to start building a rainy day fund), Spending (money for everyday wants and needs), and Giving (money for their favorite causes and charities). If your child is doing chores for an allowance, it can be helpful to put equal amounts of allowance earnings into each bucket to keep things simple. Every few weeks, you can ask them how they’re doing on each of these ‘buckets.’ What do they have in total savings? Have they accumulated enough ‘spending’ money to buy that new toy they’ve been wanting—and is that how they want to spend the money? Where do they want to donate the charity funds?

Money in the bank!
To really connect the dots, you can help your child open their very own savings account. As they keep accumulating money in their rainy day fund, they can deposit the money into their account at the bank, where it’s safe and secure. Each month, you can show them how to read the statements, and explain what it means to earn interest on savings kept at the bank.

financial education

Teaching your kids about money at every age

Posted on May 20, 2022 by Tim Connolly

As a mom of three myself, I know how important it is to see my kids succeed. I certainly know money isn’t everything. But understanding how to save and spend it is an important life lesson.

YOUNGINS (3 TO 8 YEARS):

At this stage, kids are becoming more independent and developing new skills all the time. This is a great time to teach your kid(s) about types of money, buying things and banking.

Erica Hebbeln, mom of a 3-year-old and supervisor of our member service representatives, has this handy cheat sheet hanging near her daughter’s piggy bank. This is a constant reminder to teach her little girl about money and the value associated with it. It’s gotten her daughter excited to “save.”

Make it fun:

Money Naming Game: In addition to the money cheat sheet, layout coins and teach your kid(s) their names and worth. You can try this with paper money too after showing them 100 cents equal to one dollar. Keep an eye out to prevent anyone from swallowing coins! After some practice, ask your kid what each coin or bill is called and what it’s worth whenever you spend in cash.

Playing Store: Get basic items: toys, candy, fruit, stickers, etc., and have your kid set up a store booth. Have them place values on the items and make pretend money to pay with. Your kid will learn about the prices of goods and how people buy things.

Bank Visit: Bring your kids with you to open a savings account in their name. Teach the concept of interest and how the money will grow simply by leaving it in the bank. Get a piggy bank for home so your kid can start saving their money in a fun way, and deposit the money into their account when it’s full.

TWEENS (9 TO 12 YEARS):

Kids don’t grow as much at this stage, but their minds continue to develop. Kids this age focus on integrating with society and the world around them. Teach them that their choices matter and how they impact their lives.

When we chatted with Jennifer Claeys, mom of two and an IHMVCU Member Service Representative, we learned cash is no longer king for this up-and-coming generation. He’d rather use his mom’s card instead of cash. Any cash he does get ends up in his little sister’s piggy bank (lucky her). Jennifer decided to offer her son a prepaid debit card that she can add to whenever he earns money. Bonus, she no longer worries about her son making unauthorized gaming purchases on her card since he has a card of his own.

Make it fun:

Allowance: Hard work pays off, and an allowance is a great motivator. Allow them to earn money for doing household chores or playing sports. Bonus money for good grades can be a powerful driver for school performance. Each time they “get paid,” encourage them to put a portion into savings.

Garage Sale: Have your kid select items they’d be willing to part with. Help them price their stuff reasonably and help run the garage sale. Allow them to keep the money from anything that sells. This activity teaches them to give up things they don’t need and how to value things appropriately.

TEENAGERS (13 TO 18 YEARS):

The teenage years are a turbulent time with changes physically and emotionally. At this stage, kids are starting to form their identities. Teenagers are capable of handling more advanced aspects of money, it’s a good time to teach teens about money.

Make it fun:

Compass Playlists: Have your kid take a look at our online courses to learn financial basics and more. Even better take them together so you can discuss what they learned. Check out our Compass Playlists.

College Discussion: Start searching for realistic college choices with your kid as early as 9th grade. This allows more time to gauge their interest and see what’s financially feasible. Talk about college costs aside from tuition like room and board, textbooks, school supplies, etc. When the time comes, encourage them to apply for scholarships, grants, and financial aid.

First National Bank of Mom (or Dad): Learning the rules of borrowing money early will help your kid in the future. If they want to buy something they don’t have the money for, offer a personal loan if their request is reasonable. Agree on an interest rate and repayment. If everything goes well, consider giving them their interest back.

The saying “It’s never too late to start” is extremely relevant when teaching kids about money. The subject matter is important for everyone to understand, no matter what age. The biggest takeaway: you can never talk too much about finances with your kid. They will appreciate that you took the time to educate them about money at an early age. As they grow older, they’ll feel more confident and excited about their financial future thanks to you.

Financial Responsibility

5 Ways To Teach Your Child Financial Responsibility

Posted on May 18, 2022 by Tim Connolly

Teaching your children how to handle money at a young age will be so helpful when they reach adulthood. As you know managing your money can make or break you as an adult. If you mismanage your money you can be looking at bad credit, debt, and many other crucial things.

So, why not give your child financial responsibility and give them an advantage? To walk into life and be able to be stress-free and smart with money. Teaching financial education to kids can also benefit them in other ways besides being able to manage money. Such as saving money, budgeting, maintaining good credit, and making big purchases.

Learning how to save to make big purchases is crucial when you become an adult you buy cars, houses, furniture, etc. The world we live in is becoming more and more expensive. If your child is young like mine; 2 years old they will be living in a more expensive economy. According to CNN money by 2030 we should expect housing rates to increase by 6.3%.

Homes that are 500,000 will be about 1.2 million by 2030 and 21,000 dollars in cars will be more like 31,000. As of 2018, it is impossible to rent a 2 bedroom apartment making minimum wage in the United States. So, teaching your children when they go to high school to start making choices about their careers will also help!

Here are five tips for teaching your child financial responsibility.

Tip One: Savings Account

Opening a savings account when your child is young will help them in the long run. Opening a bank account for them as young as five will give them savings to fall back on when they are older as well it’ll teach them how to put money away. A savings account will also help teach your kids about interest. Which in life may help your little one in the long run. It’ll also have them build confidence in their ability to manage money. They will have pride in their growing bank account!

Tip Two: 80, 10, 10

This is something I learned when I was younger. It has helped me from early childhood to adulthood. Basically, 80% of your check is for bills, activities, and food for the month. Then 10% goes to your savings and then 10% goes to the church. However, if you are not religious put 20% away to your savings! This is so helpful and if you teach this practice to your kids with their allowance.

Tip Three: Envelopes

It sounds super silly but this will help teach your kids how to manage money! You take several envelopes and write down the bills you have. For example “Phone Bill” or “Car Payment” and then you place over the course of a month the money need to pay your bills. This tip is also very helpful when you want to manage your spending money. For example, you can write “Food” and on another “Clothes” this will help when your child wants to eat out or buy new clothing/toys. After, a few months you may be able to even throw away the envelopes due to your child knowing how to manage without the extra help!

Tip Four: Buying their own items

If your child was anything like me when I was young then you know they have a hard time grasping money really doesn’t grow on trees. Of course, as their parent, you will still help purchase their clothing, toys, etc but, giving them the money and making them budget will teach them responsibility. For example let them choose their favorite toy, give them 40 dollars, and make them calculate how much each toy cost. After, have them choose the toys they’re able to afford. Let them know if they work hard enough eventually they will be able to come back and buy the other toys. Repeat! Also, having them purchase the items will help your little one gain confidence!

Tip Five: Have Open Talks about Money

Letting them know how much the house cost, the cars cost, the water bill costs, and overall everything they need in life to live costs. If your child gets an allowance, take their “portion” to contribute to the bills. For example, if you give your child 20 dollars a month take $1 for the water, $2 for the electricity, $2 for food, $3 for rent, and $5 for savings. Which will leave them with 7 dollars to do what they please! It shows in life bills come first and then fun! Obviously, this money won’t actually be taken away but be put towards college or into their overall savings. Or you can give the child the money-back and have them buy things they “need” Like clothing, soap, a snack, etc.

Money Games

5 Games That Will Help Your Kids Learn About Savings

Posted on May 18, 2022 by Tim Connolly

Teaching your kids money and savings can be quite an undertaking. Luckily, there are games and fun ways to help your children engage with this learning process. Check out these 5 games that will help your kids learn more about saving.

Monopoly

Not only is Monopoly a fun family game, but it’s also a great game to teach kids about money. The game can get lengthy, but it teaches some valuable lessons. Not only do you learn how to save your money, but you also learn about making good purchasing decisions and investing. There are other fun versions of Monopoly that can cater to your child’s interests, such as Star Wars Monopoly, Pokémon Monopoly, Disney Monopoly, and many more.

Online Games

There are countless online games made to teach kids about money. Simply search “money games for kids” in a Google search and you’ll find a bunch of options. You can find a game that fits your child’s age, interests, and the topic that you want to teach them. Two examples of popular online money games include Change Maker, where the user practices counting money, and Financial Football for those big sports fans.

MySims

MySims is a popular video game where you become a character who is placed in a real-world setting. Players have many roles in this game, like building new places and attracting residents to their town, but they also use a form of currency called Simoleons. As the player, you’re responsible for managing your Simoleons well and spending them wisely. This game teaches young kids the importance of saving and the consequences of impulse buying.

The Game of Life

Another very popular and common board game is The Game of Life. Players go through important stages of life, deciding things like if they want to go to college, what career path to take when to buy a home, and much more. Along with these decisions, players start with a certain amount of paper money and make purchasing decisions that affect the outcome of their role in the game.

Pretend Bank

Sometimes the simplest at-home games are the most fun for kids. Try creating fake money by cutting up paper or using money from board games you already have at home. Your kids can pretend to be the banker or the customer, either having to count and collect money or make decisions on how to spend it. There are lots of additions that can be made to this simple game, like making a fake grocery store of play food or a fake toy store. With these, kids can decide how much to buy, how often to buy it, and decide if they need it or not.

There are limitless options when it comes to games involving money. Teaching your kids these money-saving skills while they’re young prepares them for the lifelong money choices they’ll make in the future! Open a savings account for your child when you feel they are ready for real money decisions.

Uncategorized

Teaching Kids To Save Money

Posted on May 17, 2022 by Tim Connolly

Teaching kids about money can have a lasting impact on a child’s life. These seemingly small money lessons will help them when they need to budget during college, save for a honeymoon, and prepare for retirement. We share the lessons you’ll need to teach kids to save money so your child can go into the world as a savvy saver.
Start with a savings goal

For kids, time, money, and savings can be hard concepts to understand. A visualization and short-term savings goals can help bring these concepts to light.

Together, pick an item or experience to work toward. (Studies show that we are happier when we spend money on group activities rather than a physical items. It may require some creativity, but see if you can brainstorm some fun experiences.)

Make the process fun by hanging up a picture of the goal and tracking the progress with a chart. Congratulate your child on every step toward their goal so the process is fun.

Move from piggy bank to bank account

When we think of saving our money, many of us think of the iconic piggy bank. However, many experts recommend a different take on the classic. So, where should young children save their money? Start with stashing your kids’ savings in a clear jar. This way, they can see their hard work add up.

Then, around age 7, move those funds to a kid’s savings account. “Try opening a digital savings account so kids can see their hard work add up quickly via a mobile app. It’s a great way to teach children about money,” said Sarah Hussain, product manager of deposit products at Alliant Credit Union.

Opening a savings account can be a big day for your child. Here are some steps to get you started:

Show your child that some banks and credit unions are better than others. “You know that research is an important part of the buying process. So, pass that knowledge on to your little ones by comparing two kids’ savings accounts with your child and talk through the pros and cons for each,” said Hussain. Walk them through the different interest rates, fees, and digital features.

Walkthrough the application together. An application for a savings account may not be the most exciting thing to do with your children. However, letting them “help” you through it could give them a sense of ownership.

Once you get approved, periodically check the account. Monitoring your account is an important lesson to share as well. Show your kids the interest rate and how much they are earning. If you stay excited, they’ll stay excited. Eventually, your conversation about interest rates could lead to conversations about investing and compounding interest.

Teach kids to save with an allowance or income strategy

Your child will need a way to generate some income so they can build their savings. Birthday checks certainly help, but a semi-regular stream of money can be more productive.

A well-planned allowance

Allowances are a debated strategy among the parent blogs, but this monetary tool can be impactful. Many of the financial pros argue against an allowance not tied to work. Instead, they recommend implementing a regular allowance attached to specific chores.

“Before you start a program, consider the details of the allowance strategy so that the rules and methods are consistent. The stronger the plan, the more you can focus on why you’ve set up the allowance: teaching your children about how to save money,” said Hussain.

A savvy income plan

If you don’t want to implement an allowance plan in your household, help your child come up with some savvy business ideas. There are many opportunities for young entrepreneurs including the classic lemonade stand, mowing lawns, or even gardening for neighbors and friends.

Help your child with a simple marketing plan and pricing of their services. Not only will your child make some extra money, but they’ll also learn a little about how a business works.

Discuss spending on wants vs. needs

Good savings habits will help your child live below their means. Create a budget for kids who might be spending a bit more. By creating a budget, you can help them understand how to spend on the essentials, like food, back-to-school supplies, gas, and clothing. When it comes to the remaining cash, you can discuss avoiding impulse buys and how to prioritize savings goals.

Let your kids make mistakes

I know, you’re thinking, “that’s easier said than done!” Hear me out.

We’ve all purchased something we regret, whether it was a treadmill we thought we’d use more or an investment that was too good to be true in hindsight. Now is a great time for your child to make mistakes because the stakes are low. If your child wants to spend their hard-earned money on a short-lived gimmicky toy, let them buy it.

Once they realize their purchase mistake, ask them what they’ve learned and how they can do better. Next time, should they research the product more? How can they remind themselves of their larger goals? What do they enjoy spending money on? Hopefully, when they spend their savings in the future, they’ll spend a little smarter.