Have you ever noticed that, aside from that 10% or so of kids who seem to have been born with a money-hoarding mentality, saving for kids is about as “second nature” as driving a car for the first time?
I want to tell you not to worry, because savings can eventually become second nature, especially with the tips I’m about to share below.
Here’s what parents can do to teach children to save money:
Tip #1: Designate a Savings Space
Let’s talk about the actual process of letting money accumulate.
Your child needs to learn that money can accumulate when it’s left alone – both from compound interest earned in a savings account, and from saving a few dollars from allowance-to-allowance.
In order to see that, you’ve got to set up saving-money spaces, which sets up the expectation that there should be savings (chances are better that it’ll happen with a saving-money space, than without one).
Otherwise, you might just continue to find it crumpled up on their bedroom floor (*gasp*! Yes, I’ve had more than one Mama Bear tell me this is an issue in their household).
So, set up some savings space for your child, whether that be in a jar, cool piggy banks, at a bank (here’s one of the best accounts to start for a child), or anywhere in-between.
Tip #2: Let them Name their Savings Space
The easiest way to teach money management to children is by getting down to a savings goal for something they want to be/do/have. I will talk about that much more in depth here, once they have that savings goal narrowed down. Then you want to encourage them to name their savings space something fun having to do with it. You could put a label on the outside of a mason jar, or add a nickname to their savings account online to do this.
There is power in naming something. Naming something gives it a purpose. A place to focus an intention. Savings accounts are no different when it comes to both needing a name and an actual purpose (which go hand-in-hand, by the way).
When a savings account lies around, unnamed, it’s this sort of blob. Sure, it can grow. Sure, you can use it for goals as they come and go. But without naming it something that aligns with its purpose, the time it’ll take you to get to whatever goals you have will take longer – no matter if you’re a child or an adult.
Clarity is powerful, after all.
Leave an un-intentioned amount of money aside for too long, and suddenly it becomes the perfect amount to spend on a new video game, or absorbs a convenience-store candy section addiction.
Account money gremlins are a real thing, my friend. Whether you’ve got a kid savings plan or an adult one!
How to Guide Your Kiddo through the Savings Account Naming Process
I hope I’ve convinced you that that this naming thing? Is sort of a big deal. Getting your child to do it early means you’re setting them up for more savings success for the rest of their lives.
So, let’s get started with this mini-savings action step that makes saving for kids much easier.
Step #1: Set Up Somewhere for your Kid(dos)’ Money to Grow
The first step, of course, is for them to have an actual place to accumulate their money.
Don’t have a savings account open for them yet? I’ve got you covered with how to open your baby’s first savings account (whether they’re still a baby or waaaaayyyy past the pacifier stage. No judgment here!).
Not ready to do that? Then you’ll want to use a piggy bank of some sort. Here are 21 particularly cool piggy banks for your kid(dos).
Step #2: Help Your Child Identify their Savings Goals
Sit down with your child and ask them what their goals are for their money.
What do they want to buy soon? What do they want to buy later?
Hint: they might not know how to prioritize now rather than later at this point in their lives, and that’s where you can help them.
Your idea for the purpose of their savings account is probably going to be quite different from your child’s. After all, you’ve been in this thing called the “real world” for quite some time now. You aren’t wet behind the ears, and you know that life takes money.
So your ideas may be things they’ll need to purchase in their teen and early adult lives, such as their first car, textbooks for college, college in general, etc.
Their savings goals? Well they might be a bit different than yours. More tangible and instant gratification-y like vacation spending money for the summer or a new video game that’s due to hit the markets next month.
So, it’s best to find some sort of compromise. And if you’re just teaching your child how to save money as well as goal setting in general? Well then you should probably stick with a short-term goal until they grow their instant gratification muscle a bit.
Remember, you can build up to the long-term goals over time.
Step #3: Rename their Account or Piggy Bank with something Cool
Once they’ve gotten clear on what they want to save for in the short-term (remember, start short, then go long), it’s time to come up with a cool name they can associate with the goal.
This name is one that gets them excited, and can pull them back into the process once they’ve lost interest in savings.
Here are some savings goal ideas, with a spiced-up version on the right side:
Textbooks = Astronaut textbooks (whatever career they’re interested in right now)
Video Game = Pokémon Ultra Sun Release
Toy = Stuffed Flamingo
How to Physically Name Your Savings Space with this Goal
How you physically add a name to your savings space (either savings account or jar) depends on where it is.
If you’ve got an actual savings account, then find it below + click for nicknaming instructions:
Chase
TD Bank
Wells Fargo
USAA
Bank of America (look at the lower right-hand sidebar for where to go after you sign in)
SunTrust
Tip #3: Set Up a Consistent Kid Money System
Let me ask you something. So, your boss gives you a $1000 check this week. And two weeks ago? It was $2600. And then two weeks from now rolls around. Guess what? You get nothing.
You’re probably feeling kind of flabbergasted, right? Worse yet, since you don’t have consistency in what you’ll be receiving, you can’t really plan for anything, you’re putting out fires, and you don’t trust that the money is coming so you aren’t putting anything into savings knowing that more will be coming soon.
Your Kid Money System matters, and if it’s not consistent, then your child probably won’t save money. Your child needs to know when they’ll be receiving money and how much they’ll be receiving, in order to plan ahead for spending (which really means, in order for them to feel like they can actually save money and even create a savings goal, instead of spending all of it today).
WANT TO SET YOUR KIDDO UP FOR MONEY SUCCESS?
It all starts with a simple, one-page allowance plan. Where can I send yours?
Not only does your Kid Money System need to be consistent, but it also needs to have clear money boundaries and responsibilities outlined so that your child understands WHAT they are responsible for and what you are responsible for paying.
Tip #4: Help Them get Clear on a Savings Goal
Your kiddo – just like us adults – will be much more motivated to save their money if they have a very specific goal in mind.
Help them come up with their goal to save for, and then tie every money conversation/money question they have back to it. Wow will those conversations be more meaningful to them!
Tip #5: Help Them See their Money Waste
Isn’t it so frustrating when your kid buys something that (and you know this ahead of time – ahhh it’s almost a curse how clairvoyant we Mamas are, right?) they’ll stop playing with next week?
So, how do you get your kiddo to stop wasting their money? Well, they’ve gotta understand that money has value. That not spending their money on something that has very little use for them, and instead spending it or saving it up for something that will make a bigger difference in their life is the way to go.
A big question parents of new high school graduates have is “How much spending money do kids in college need these days?” Hand in hand with this is the question of who is responsible for this amount.
Parents of current college students also need to revisit spending needs each year (and sometimes mid-year).
Families almost universally agree that students should be responsible for earning and saving money for at least some of the “extras” they’ll need in college, but there are many variables:
How does your family define those extras? Will spending money include books, clothes and travel expenses?
Is the social life on or off campus? Do most students go home on the weekend?
Location is a factor — the cost of everything tends to be higher at an urban campus (though internet shopping is an equalizer).
Will your student have a car on campus?
Start with a Conversation (Take Notes!)
The first step is to talk about who will pay for what (beyond tuition, room and board; this is a separate strategy session) for the next four years.
For example, “We said we would pay for textbooks freshman year, but after that they would know what to expect and would have to cover those expenses,” says Laura, a parent of two in college. In addition, “We sent them off to college well stocked with clothing” but after that they paid for their own clothes except for a few special items (an interview suit, a nice dress, winter coats).
Other expenses to discuss:
Share of the phone bill
Linens and dorm furnishings
Laundry money
Food/drink outside of the meal plan
Entertainment
Local travel (bus pass)
Travel home (train, plane)
Recreational travel (spring break?)
Electronics
School supplies
Personal items (toiletries)
Sorority/fraternity dues
If your student will take a car to college, there is auto insurance, campus parking permit, gas, repairs/maintenance, etc.
“Making things clear — what we were willing to pay for and why — has helped,” Laura reflects. “It also helped to talk about financial matters as they were growing up. There are choices involved in everything.”
The Summer Before College: Work, Save, Plan
Now that you’ve discussed how much they may need each semester, you can help them set a goal for their summer earnings. Some students have already been working and/or saving gift money and have built up robust bank accounts by the time they graduate from high school. Others are just getting started. A summer job should allow them to add $2,000–$3,000 or more.
As your student evaluates what’s in their savings/checking accounts, you can talk about the advantages of maintaining a level of savings throughout college. It’s a good idea for them to always have a cushion in case of an unexpected expense and also aim to graduate with a healthy balance in the account.
Winter break and spring break can be good opportunities for your student to earn money in a short-term position or by picking up extra shifts at their on- or off-campus part-time job.
Allowances and Parental Supervision of Spending
Some families give their students a monthly allowance, ranging from $75–$225, to supplement the student’s own savings. After the first year, especially for students making good money through summer employment, an allowance may no longer be necessary.
Cathy recommends a student checking account linked to the parent’s account. “They use their ATM card as needed but you can see EVERYTHING they spend $$ on.” Her daughter receives a $200/month allowance which is easy to set up as an automatic transfer; they can both view her spending habits and increase the allowance if needed for legitimate expenditures “or cut back if she’s eating too much fast food.”
Scott has a similar approach: “I deposit a monthly allowance directly into my daughter’s bank account and that money is hers to spend or save. We decided on an amount before she started school and reviewed it after her first semester and first year, agreeing on any changes.
Parents usually provide financial education to kids and help them budget by taking charge of their own earnings and then doling it out in monthly installments as an allowance. Others put on their own credit card accounts — again, they can see the charges and talk about it.
A few questions to ask your student, and yourself:
Will the student be in charge of their own savings?
Do you want to control the amount of money available each month, at least for the first semester or two?
Will you see their bank account activity?
Working During the School Year
To keep money coming in, many students get campus jobs, even if for just a few hours a week. Some parents prefer their students to settle in and wait until second semester freshman year or sophomore year to get a campus job.
Your student may qualify for work study as part of their financial aid package, but even for students without work study there should be plenty of employment opportunities.
Beth’s two sons, soon to be juniors, have each held multiple jobs in areas that are both meaningful and fun (recycling truck driver, writing tutor, climbing wall instructor, research assistant, and tool shop proctor to name a few!). One started working freshman year to supplement his allowance and the other waited until sophomore year. “They have enjoyed the jobs and like earning money.”
They didn’t need an allowance after freshman year because of campus employment and solid summer earnings. But Beth observes, “If our kids were college athletes or heavily involved in non-paid extracurricular activities such as the school paper or student government, we would have to help them.”
Parents agree that it’s important to prioritize studies and extracurriculars. Laura says of her daughter, who has had several campus jobs — some resumé-building (tutoring, TA) and some not — “she likes to make money and she likes to be busy. As she has gotten more involved in campus activities, she has cut back on her jobs.”
Off-campus jobs are great for some students. Brigitte has been thrilled to see her daughter really loving her university community, even beyond the boundaries of campus: “Getting a job in a restaurant makes her feel like she really lives there, so much that she wants to stay during her vacations to work and be with friends.”
Many students do not work during the academic year, or work minimally, and there are good reasons for that, too. Scott says, “We’ve taken the position that our daughter’s job is school…. In general, we’re trying to give her four years of experiences that will help her grow as a person and find a direction for her career. She’ll be working for a long time after college!”
Odds and Ends
“If big expenditures come up — a new phone, car repair — we talk it through and usually split the cost with them.”
Encourage your student to think ahead about the extra expenses that might go along with a semester abroad (primarily extra travel while in another part of the world).
“My older son is now living off campus and we give him the money that we would have paid the college for his room and board. He is budgeting it — paying his own rent and shopping/cooking for himself.”
Revisit financial needs and also the intensity of your student’s schedule (increased academic pressure, etc.) each semester or year
Money and the family: Creating good financial habits
Introduction
Money and stress go hand in hand. According to APA’s 2014 Stress in America survey, money is consistently among the top sources of stress for Americans year over year. This year’s survey also revealed that parents of children under the age of 18 are more likely than adults with no children to have higher financial stress and are less likely to feel financially secure.
Yet many Americans are stressing in silence. The 2014 survey results indicated that 36 percent of Americans are uncomfortable talking about money, and 18 percent say money is a taboo subject in their families. For many Americans money is a touchy subject.
That’s a problem, experts say—especially in families with children. We develop our attitudes and beliefs about money in childhood. By talking often about money, and modeling good money management habits, you’ll set your children up for a future of financial success.
Abstract concept
Most of us appreciate the importance of money management for children. Nearly all of the 2014 Stress in America survey respondents (95 percent) said parents should talk to their kids about money. But only 64 percent said they themselves were taught how to manage money, and just 37 percent said they often talk with their family members about the subject.
Yet helping kids become financially literate is more important than ever before, experts say. Previous generations could count on pensions and social security benefits to sustain them after retirement. Now, individuals must start planning—and saving for— retirement decades in advance.
Making matters worse, money has become an even more abstract idea. Credit and debit cards have replaced dollars and coins, making it difficult for kids to grasp the concept of paying for goods and services.
Open dialogue
With a little planning, you can talk to your kids about money in healthy, helpful ways.
Include the entire family in financial discussions. You may want to avoid the word “budget,” since it makes people think about cutting back. Instead, sit down together to develop a family spending plan. By focusing on what expenses are important to your family, you will naturally find ways to cut back on items you care less about.
Keep your goals front and center. Consider making a collage or bulletin board to represent your family’s financial goals. A daily reminder of the vacation you’re saving for or the house you’d like to buy helps both kids and adults keep big-picture goals from getting lost in the day-to-day shuffle.
Save together, spend together. When you decide to save for something as a family—such as a new computer or a trip to a theme park—show kids what saving money actually looks like. Get a big jar, and each week add dollars to the jar so the kids can see the savings grow. When you have enough saved, comparison shop together to help the children learn how to find the best value for their dollar.
Choose your words carefully. Parents often find themselves saying, “We can’t afford it.” But that can send a confusing message to kids. Some might worry that their family doesn’t have enough money for necessities. But often, they know you’re not being completely honest—technically, you probably could afford that $10 trinket tempting them from the checkout aisle.
Instead, try saying, “That’s not how we choose to spend our money.” This helps kids think about what they value. You might also say, “We can’t buy it now, but we can talk about how you can save for it, or you can put it on your birthday wish list.” That helps children learn to delay gratification and plan their spending—two important pieces of financial health.
Use allowance as a tool
Experts recommend giving children an allowance as a way for them to become financially literate. But don’t tie the allowance to chores. That can backfire when kids expect to get paid for everything they do to contribute to the family.
Many financial experts recommend getting (or making) a piggy bank that’s divided into sections. Each time the child receives an allowance, he or she should put a predetermined portion into each section:
Spending—Kids can spend freely from this section. But when it’s gone, it’s gone!
Saving—Children can set a spending goal and save up to meet that goal.
Donating—By setting aside some money to donate, children learn the value of charity.
Investing—Help kids learn to save for the future. Once you have enough money saved up in this section, you can help your child open an investment account.
When your child becomes a teen, consider giving allowance on a prepaid credit card. This way, children can learn to track how much they’ve spent and how much they have left to parse out. When they go on to use their own debit and credit cards, they’ll already understand how to track and manage electronic money.
If you aren’t already a parent, you might wonder- how expensive can children be? But those that have kids know precisely how child-related expenses pile up and can run into thousands of dollars each year. So it is very important to teach money management to children in their early stages.
Basic Expenses
A growing child requires food, housing, medical, educational and many miscellaneous expenses. However, this does not cover the savings needed to meet a child’s future college tuition, fees, room, board, and other costs when they live away from home. Parents, both prospective and existing, need to look for ways to save and invest for their children.
Some children learn money management strategies early in life, and later pay for their own higher education and chart a path of financial success.
But there is no certainty on this count, and parents will have to jump-start their savings for children early during their working life.
Don’t Bank on Home Equity
Many parents view their home equity as savings they can easily dip into when required. However, property values fluctuate depending upon the economic conditions in the realty market. So it isn’t always a smart idea to bank on this avenue when it comes to children-related expenses.
On the other hand, adopting strategic methods and setting up accounts yields far better savings that you use when needed. The sooner you start saving, the more time your money has to grow. The longer you save, the more money you have on tap.
So when the time comes to pay for your children’s college, you are ready with a stockpile. Here are 6 ways to save and invest for your children:
1. A Separate Savings Account
A high yielding savings account is necessary when you need savings for future use. This account is separate from your regular savings account you use routinely.
For example, savings account at an FDIC- insured bank provides you safety and a reasonable rate of 1.5% APY. It helps to give a nickname this account like ‘Kid’s Fund” etc. This will encourage you to keep adding money into the account to reach the goal you have set for yourself.
2. Open A Children’s Savings Account
Most banks and credit unions offer children’s savings accounts. These accounts are co-owned with parents and help to develop a saving habit among children, as also introduce them to money management.
When they reach a certain age, they can have a teen checking account and a debit card. Parents need not worry about their children overspending as these cards have a lower spending and withdrawal limit.
Parents can also keep an eye on the account as co-owners and help children learn more about money management.
3. Start a Custodial Account
This account keeps safe the savings built for your child’s education, a house, etc. until the child becomes an adult. The account is funded and managed by you, but the child is the account holder.
You have no control over the use of the account once the child becomes an adult because the savings are transferred from the custodial account to the child’s account. You can open these accounts at banks or brokerage firms.
UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfer to MinorsAct) govern the operation of custodial accounts. Children under 18 get standard tax breaks under this account.
There are no restrictions as to how the account is used so long the beneficiary is the child.
A portion of the gains from the account is tax-free. Some part is taxed at the child’s income tax rate and the residual at the parent’s tax rate.
4. Leverage a 529 College Savings or Prepaid Tuition Plan
Contributing to a 529 plan is a good start to save for college education. All50 states offer at least one plan. You can invest in out-of-state 529 plans as well, and there are two types of 529 plans:
Parents can put money aside in a general college savings plan. The funds can be used at any school, including private schools from kindergarten to 12th grade.
Parents can put money aside in a general college savings plan. The funds can be used at any school, including private schools from kindergarten to 12th grade.
The first option is more flexible, and many families may find it to be a better choice. Children too can put their money into this account. The major benefit of the plans is that it is tax-deferred. Any withdrawals are tax-free with a proviso that they are for qualified educational expenditure.
5. 529 is not the end of savings
A 529 plan has its advantages when it comes to savings. But there are other options, like the Uniform Gift to Minors Act (UGMA) or Uniform Transfers toMinors Act (UTMA) accounts.
These accounts are a way to transfer assets to the minor and offer more investment options.
While opening these accounts, you must remember that after a certain age, the amounts and assets in the account are entirely under the control of children for whom you have opened the account.
6. Open a Coverdell Education Savings Account
This account is similar to the 529 plans discussed above. It is a federally sponsored custodial account or tax-advantaged for qualified educational expenses.
Parents can save money for a child’s education, and the amounts grow tax-free until their withdrawal. It includes college as well as private tuition from K-12 grade.
While the account can be opened for a child under the age of 18, the assets must be withdrawn when he or she reaches the age of 30.
There is a lower limit of $2000 to this account, and like 529, the withdrawals for qualified educational expenses are tax-exempted.
As a parent, saving comes almost by default, something we do almost naturally particularly when there is an investment to be made.
This is not so for children. However, day-to-day activities can provide financial education to kids. These mundane activities should not be under-estimated.
Tip 1: Tell Stories
Tell children stories that promote the values of saving and managing money wisely.
Tip 2: Take Them Shopping
Take the children to the supermarket and try to involve them in the buying decision and payment process.
Engaging them in discussions about which shopping items cost more or less could prove fun.
Tip 3: Children Love Field Trips.
Arrange a trip to the bank with your child and while there, teach them the difference between the withdrawal and deposit counters and how to deposit money.
An icing on this trip would be to put them through the process of opening their personal bank accounts.
Tip 4: Reward Them.
Reward them when they save. Setting targets keeps the big picture in their minds as they save more and can calculate what is left to meet targets and how long it would take to achieve this.
Tip 5: They Need a Piggy Bank!
Buy them coin jars or piggy banks.Better to buy wooden boxes or plastic piggy banks if the child is less than age 6 for safety reasons.
You can mark them for specific projects e.g.For new bike, For new dress to keep the goal alive for the children as they save.
Tip 6: Teach Them.
Teaching your children how to save responsibly is a good way to ensure that they grow up to make informed and responsible financial decisions.
This would only work as far as you show good examples of wise and consistent savings behavior.
In the modern world, teaching kids about money is a lot more complicated than it used to be. It’s no longer enough to know how to squirrel away quarters in a piggy bank. To get along in the 21st-century economy, kids need to learn about things like electronic banking, compound interest, and the importance of staying debt-free as they grow up.
Fortunately, the same technology that makes modern money so complicated has also created new tools for learning about it. The Internet offers a wealth of educational websites, games, and banking apps to help kids of all ages master the basics of personal finance. From the three-year-old learning to identify different coins to the teenager thinking of starting a business, kids can take advantage of these tools to learn the money management skills they need.
Tools That Teach Financial Skills
The Internet is the biggest collection of information in all of history. You can find information online about almost anything, from cooking to computer programming to managing your money. Adults can use online personal finance courses to learn about budgeting, building credit, and investing for retirement.
The Internet also has a wide array of sites to educate kids about money. With fun facts, games, and videos, these sites present financial information in a form children can understand. In fact, many of them are so much fun to play with, kids won’t even realize they’re learning at the same time.
1. H.I.P. Pocket Change
The U.S. Mint’s kids’ site, H.I.P. Pocket Change, aims to teach children about the money Americans use and its history. In its pages, youngsters can find a wealth of kid-friendly information about how coins are made, current U.S. coins, coin collecting as a hobby, and the mint itself.
Kids will probably have the most fun with the “Games and Activities” section. Some of the games, like “Hoop and Darts,” are purely for entertainment. Others, like “Gold Rush” and “Map Mania,” tie in to lessons about U.S. history or geography. (Most of these games are narrated by an annoying synthesized voice, but kids who are old enough to read can simply turn it off and read the instructions instead.)
The game that can help children the most with real-world money skills is “Counting with Coins.” This game teaches preschoolers and young school-age children how to identify different coins and their values, add up prices, and perform basic math tasks. As they complete challenges, they earn badges and collect supplies for cartoon characters going on a camping trip.
2. Practical Money Skills Play
Kids of all ages, from toddlers to teens, can learn about money and have fun at the same time on Practical Money Skills Play. This subsection of the financial literacy site Practical Money Skills features a variety of games that teach different types of money skills, including:
Cash Puzzler. This is a simple puzzle suitable for kids ages 3 to 6. A picture of a $1, $5, $10, $20, or $100 bill is cut up into small squares, and the solver must reassemble it. After solving the puzzle, kids can read “fun facts” about the president featured on the bill.
Peter Pig’s Money Counter. This game teaches 5- to 8-year olds how to identify coins and add up their values. They earn virtual money for playing, which they can choose to save or spend in a virtual store on accessories for Peter Pig.
Financial Soccer. This Visa-sponsored game uses soccer to make a multiple-choice money quiz more entertaining. Players answer questions about personal financial skills to advance down the field and try to score. Topics include saving, budgeting, establishing good credit, avoiding debt, and identity theft. There are several levels of difficulty: Amateur for ages 8 to 11, Semi-Pro for ages 14 to 18, and World-Class for 18 and up. Players can click on a topic and level to read up on the subject before playing.
Financial Football. Also sponsored by Visa, this game works the same way as Financial Soccer, but it features a different sport and more elaborate graphics. Players can select the specific plays they want to run, but success or failure depends on answering the question correctly. This game offers the same difficulty levels as Financial Soccer, but with different names: Rookie, All-Pro, and Hall of Fame. Financial Football is available as a Web-based game or an app for iOS or Android.
Money Metropolis. In this game, 7- to 12-year-olds make their way around a virtual town performing tasks to earn money. They can spend their earnings in the town’s virtual stores or save them up toward a long-term goal.
Road Trip to Savings. This is a driving game with a twist for ages 8 to 15. As players move along the road, they try to hit opportunities for earning money while avoiding indulgences that cost money. They must make sure to gas up regularly and pay their auto insurance premiums, or their trip ends early.
Countdown to Retirement. This slower-paced game is a simulation to show kids ages 8 to 15 how life decisions affect their retirement savings. Players assume the role of a young person starting their first job. They work their way through life, earning promotions and making choices about housing, transportation, saving, paying off debt, and “business opportunities” that aren’t always what they seem. If they make the right choices, they end the game by retiring in style.
The Payoff. This immersive, experiential game for ages 14 and up is sponsored by Visa. Teens take on the role of an aspiring video blogger trying to prepare for an important video competition. To succeed, they must make decisions about earning, spending, and dealing with financial crises. The game teaches about topics such as banking, saving, payday loans, insurance, and online safety.
3. Savings Spree
The iOS app Savings Spree, sponsored by Money Savvy Generation, is a game to teach kids to save money for a specific goal. It’s presented as a game show hosted by a talking cartoon pig, with players taking on the role of contestants. The game is designed for ages 7 and up, but younger kids can also play with help from a parent or older sibling.
Players start the game with a small amount of money and make choices about how to use it. They can spend it immediately, save it for a short-term goal like a new bike, invest it toward a long-term goal like college savings, or donate it to help others. Each choice leads them into a mini-game, such as matching or a maze, which gives them the chance to win or lose money with their decisions.
The game shows how daily lifestyle choices can affect long-term savings, such as how buying a daily soda can add up to over $500 in a year. It also teaches about how unexpected expenses can derail your savings plans and the importance of having an emergency fund.
The Savings Spree app isn’t free, but it can provide kids with hours of entertainment, along with some useful knowledge. It’s received awards from the Parents’ Choice Foundation, Children’s Technology Review, and the National Parenting Product Awards program.
4. You Are Here
The U.S. Federal Trade Commission (FTC) is the sponsor of You Are Here, a site that teaches kids to be smarter consumers. Aimed at fifth to eighth graders, the site is set up as an imaginary shopping mall populated by colorful cartoon teens. Currently, the site requires Flash software to use.
Kids visit different areas of the mall to learn about different financial topics. The sections include:
West Terrace. This area focuses on advertising and marketing. Kids can learn about advertising techniques by designing a poster ad for Sherman’s Shoes, play a matching game at Market-Match Wireless to learn about target marketing, visit Gr8 Gadgets to understand how TV ads can be misleading, and check out the Nutritional Emporium to learn about suspicious health claims.
East Terrace. This section of the mall teaches kids about scams. They can learn about bogus modeling offers at Clothing Co., fraudulent health products at Maggie’s Miracle Products, phony freebies at the Free Vacation booth, and tips for spotting scams at Kablamo! Comics.
Food Court. The Food Court showcases the idea of business competition. Kids can learn about how competition helps customers by visiting three competing pizzerias, watch a documentary about monopolies and unfair competition at the movie theater, explore the concept of supply and demand at Candytooth Kingdom, and protest a proposed merger at the Tripple Cold Creamery.
Security Plaza. This area is devoted to fighting identity theft. Mall Security explains how to reduce your risk of identity theft, Network Security discusses online privacy protection, the Arcade explains what type of information it’s most important to protect, and the Book Cafe explores safety on social media.
5. BizKid$
The BizKid$ site is all about celebrating young entrepreneurs. It’s the companion site to the “BizKid$” TV show, a personal finance show for kids on Maryland Public Television. The show profiles young entrepreneurs and explores topics like credit and debt, budgeting, taxes, saving, careers, financial markets, and the economy.
The website features:
Clips from the show
Games about resource allocation, such as running a lemonade stand or buying piggy banks to attack rival pigs
Resources for starting a business such as a sample business plan and tips on marketing, bookkeeping, and making the sale
Resources for adults, including a blog called Money Talk with tips for parents on talking to kids about money, lesson plans and a treasure hunt activity to run at school, and a community toolkit on incorporating Biz Kid$ material into local community events
Most of the content on the BizKid$ site is free. You can pay for extras like full episodes of the show, copies of the book “How To Turn $100 Into $1,000,000,” or an online financial literacy course based on the book. Middle school and high school teachers can also access companion lesson plans for each episode of the show.
6. Jump$tart’s Reality Check
The Jump$tart Coalition for Personal Financial Literacy is a nonprofit that promotes financial education for kids. One of the tools it uses to do this is its Reality Check quiz for teens. It asks teens multiple-choice questions about what lifestyle they imagine for themselves after they graduate from high school or college. For instance, they can select where they plan to live, what type of transportation they plan to use, and how much student loan debt they expect to have.
After they submit their answers, teens get the “reality check” part. The site estimates how much the student’s chosen lifestyle would cost and gives some examples of jobs that pay the salary they’d need to finance it. It also outlines what level of education they’re likely to need to get these sorts of jobs.
This preview of the future helps steer youngsters toward realistic choices about their future career path. Based on the answers they get, they might decide they need to stay in school longer, choose a different career, or scale down their expectations about their future lifestyle.
Apps for Managing Money
Games and quizzes can help kids and teens learn about money in the abstract, but at some point, they need to start managing their own money in the real world. That’s why many parents choose to give their children an allowance. It gives them real, practical experience with handling money and shows them how their choices about spending and saving make a difference. And, if the allowance is tied to chores, it also teaches them the important lesson that time is money.
In the old days, kids used to stash their nickels and dimes in a piggy bank. That’s still an option today, but children who do this miss out on the interest they’d earn with a real bank account. They also have to keep all their money in cash, which isn’t useful for online shopping.
Fortunately, in the modern world, there’s an app for that — several, in fact. Some allowance-tracking apps are tied to a real-world bank account, while others are just a way of keeping track of how much cash kids have earned. Some apps are best suited to young children, while others are appropriate for teens. Whatever your kids’ ages and needs, there’s an app that can help them manage their money.
7. PiggyBot
The free PiggyBot app for iOS is a virtual piggy bank for children between the ages of 4 and 8. For kids who are used to a physical piggy bank, PiggyBot has a familiar look and feel, but it deals with virtual money, not physical coins and bills.
To use PiggyBot, kids create a virtual account, complete with their own PIN. Each week on allowance day, parents or guardians can add virtual funds to their kids’ accounts. This eliminates the need for parents to keep cash on hand for allowances, and it allows children to watch their account balances grow.
Each account contains three separate buckets: one for spending, one for saving, and one for sharing with others through charitable giving. Parents can decide how to divide up their kids’ earnings among the three. Kids can set goals for each bucket, add pictures of the things they’re saving for, and track their progress toward their goals. When they reach a goal, they earn a special “Goal Getter” message and can display the picture as an achievement.
One limitation of PiggyBot is that it’s not tied to a real bank account. That means when kids actually want to cash in their earnings, they need to ask a parent or guardian to either make the purchase for them or take them to the real bank and pay out the money in cash. So kids aren’t literally in control of their own money; they’re still dependent on Mom or Dad to hand over the promised funds. That’s why this app is most suitable for younger kids who may not have the discipline yet to handle real cash.
8. Bankaroo
Like PiggyBot, Bankaroo is a virtual bank account for kids to track their allowance money. However, this app is more sophisticated, like a real bank account rather than a simple piggy bank. Although any child with basic reading skills can use it, Bankaroo says most of its users are between the ages of 5 and 14.
Kids can use their Bankaroo accounts to keep track of their earnings and spending. They can view past and upcoming transactions and even make transfers to other kids in the family. They can also set savings goals, monitor progress toward them, and earn digital badges for achieving them.
Bankaroo offers extra features for parents. Besides using their kids’ Bankaroo accounts to pay them for chores, they can choose to encourage saving by adding “interest” to their kids’ savings accounts or matching the money they set aside in savings.
However, like PiggyBot, Bankaroo isn’t tied to a real bank account. Though kids can set up recurring “payments” out of their accounts to cover things like ongoing subscriptions, their parents or guardians are the ones who make the payments. If they want to spend their funds at a store, kids have to “withdraw” the cash from a parent.
The basic Bankaroo app is free and works on iOS, Android, and Kindle. There’s also a Web-based Bankaroo Online that works with any Internet-connected device. If parents choose to pay for the more advanced Bankaroo PLUS app, their kids have the option of setting up three separate accounts within the app: a “checking” account for day-to-day spending, a “savings” account for long-term goals, and a “charity” account for donations. There’s also a special Bankaroo for Schools app for the classroom, which includes an online portal for teachers and a mobile app for students.
9. Wallit
The free Wallit app takes PiggyBot and Bankaroo’s features to the next level. You can use it not only as a virtual tally of allowance money and financial goals, but also for real-world spending and saving. And it’s for whole families to use together.
Unlike PiggyBot and Bankaroo, Wallit is linked to a parent’s checking or savings account, so they can transfer real dollars into the account. If a teen has a bank account of their own, they can transfer money from Wallitt into it. If not, they can use the money in their Wallit account to purchase gift cards for top retailers. However, they can’t spend more than they have in their Wallit account, so there’s no risk of overdraft fees.
Family members can use Wallit for more than just transferring money. For instance, parents can use it to assign specific tasks, such as chores, to other family members, and pay for them when they’re completed. Users can set financial goals with Wallit, allot money toward them, and track their progress. Wallit can teach kids and teens about saving, spending, budgeting, and goal setting, while also giving them hands-on access to their money.
10. BusyKid
The BusyKid app offers a lot of features for both parents and kids. For starters, it serves as a digital chore chart. Parents can add chores to a list and set a fee for each one, and kids can log on to select “I did it” when they complete one. As soon as the parents confirm the chore was done, they can immediately transfer the payment for it from their bank account. They can also use the app to pay their kids a regular weekly allowance.
Kids can use their earnings in BusyKid in a variety of ways. They can save the money, donate it to a charity, select “get cash” to request a cash transfer from a parent, or load money onto a bank-issued reloadable prepaid card for spending. Most intriguing of all, they can choose to invest their funds in stocks — yes, real ones — for companies such as Nike and Netflix.
If this sounds like a little too much responsibility for children, don’t worry — BusyKid provides a safety net. Parents get the final say over any transfer of money into or out of the system, from allowances being paid to money being donated to charity. The app sends parents a push notification each time a kid uses it to transfer money, and parents simply respond to it to approve the transfer.
There’s no monthly subscription fee for BusyKid, but there are a variety of other fees users may encounter if they’re not careful. For instance, users pay a fee to transfer money between cards, transfer money from a card to a bank account, request a paper statement, or order a replacement for a lost or stolen card. Also, kids can be charged a declined transaction fee if they attempt to use their prepaid cards before funds have been loaded.
Moving to a new country invariably means better opportunities and a higher quality of life for your family. During this transition it is quite natural for children to be overwhelmed and influenced by the myriad options available, at their disposal. This could be the perfect juncture for you to provide financial education to kids.
While it is never too early to teach them about financial management, it is ideal to start encouraging them to set goals and begin saving when they are between the ages of 12 to 15. Here are a few ways in which you can inculcate financial discipline in your child.
Delegate responsibilities
Trusting your children with a few daily chores will make them feel responsible at a young age.
For instance, once a week, your child can be responsible for the grocery needs of the family. Give him/her the money and the list of items required with instructions that you would want them to follow. After they return home with the items, you can check whether they missed anything from the list or bought something on a whim. This could be your child’s to initiation into the world of money management.
Teaching kids to save money empowers them to learn to earn
In certain cultures, it is believed that children must earn only after they complete their education. But this imparts a sense of dependency in them till their early 20’s. Encourage teenagers to take up part-time jobs or complete household chores to earn their allowance.
For example, if they are interested in working at a bakery for a few hours after school, they may even learn a life skill in addition to earning money. If your child is too young to work outside, get them to do some simple household chores – like walking the dog or folding their clothes – and reward them with a weekly allowance.
What is financial discipline? Learning the difference between needs versus wants
Overindulgence can prevent your child from distinguishing between needs and wants. Giving in to all their demands may not teach them the value of money. Help them develop a strong understanding of their wants and needs and avoid giving in to their desires. Set rules – if your child is keen on purchasing a ‘want’, they have to be a part of the buying process by contributing to it with their pocket money.
How can I help my child manage money? Introduce budgeting, inflation, saving, and investing
Even adults sometimes struggle with critical financial concepts like inflation and investments. If your child has reached adolescence, teach them basic concepts of personal finance like budgeting, savings, inflation, and investing wisely. You can then assist them in opening a bank account and saving money in a bank so that they can earn interest and realise the benefits of saving.
Teaching kids about money should involve helping them learn to make wise choices. If they desire a new laptop or the latest gaming console, introduce them to the concept of budgeting and help them plan their purchase. Encouraging them to assess where they spend their money will ensure your child is financially savvy at the right age.
As an expat, part of your finances goes towards sending money home. When teaching money management to your kids you can also explain how you budget and save according to the amount you remit month on month.
As an expat, you are likely to be transferring money to your loved ones back home using a money transfer service such as Xpress Money. Educate your child about the currency exchange rate and the importance of the money that is being transferred.
With these tips to inculcate financial discipline in your children, they will not only be financially disciplined but will also have a better chance of achieving financial independence at an earlier age.
As you probably know from experience, teaching kids about money is one thing and giving them money is another. That’s why allowances are so popular. It’s a way to get money into your kids’ hands so they can practice using it while creating an opportunity to talk about money and teach good habits.
But how do you make the most of an allowance?
The jar system is a great way to teach kids how to manage money wisely and to help them develop the skills they’ll need as adults. By being able to visualize their spending and saving over time, kids are able to see the relationship between their values and their money so that they can make better choices.
The jar system works by dividing an allowance into three categories or “jars”: a part to be spent, a part to be saved, and a part to be given to others. It encourages mindful spending, teaches the power of delayed gratification, and helps kids develop a sense of belonging in their communities.
Here’s how to set it up.
Decide how much allowance to give and when
If you don’t already give your kids a regular allowance, you’ll have to decide how much to give them and how frequently. A good rule of thumb is to give a dollar per year of age on a weekly basis. So if your kid is five, give them five dollars a week. Once your kid is over 10 years old you may want to sharply increase their allowance to include a budget for some of their clothing or things like their phone bill ( Gail Vaz-Oxlade’s book Money-Smart Kids has great advice on this). As your child’s age increases so should their allowance and financial responsibilities.
You’ll also have to decide if you want to tie their allowance to their chores. Some parents like to do this while others don’t because they believe chores are a responsibility that shouldn’t be financially motivated. A popular option (and one we recommend!) is to give a base allowance that’s not tied to chores, but provide opportunities to earn more money by doing extra tasks around the house.
Don’t get hung up on figuring out the perfect allowance number. You can always change it, and the amount itself matters less than the fact that you’re using an allowance as a consistent opportunity to practice using money. Allowance amounts vary and what’s right for another family won’t necessarily work for yours, but the general idea is to give your kids enough so that they can buy some of what they want but not so much that they don’t have to learn how to make trade-offs.
Set up spend, save, and give jars and decide how much to allocate to each
Divide the allowance into a portion to be spent, a portion to be saved, and a portion to be given to others. As a family, you’ll have to decide on what percentage to allocate to each category (i.e. 60/20/20, 70/20/10, 80/10/10). Again, don’t get too caught up on this. You can always adjust it down the line. The main thing is that you’re introducing the concepts and teaching the value of paying yourself first. Some parents like to add a twist by matching savings and giving contributions.
It’s important to physically separate the money allocated to each category because it helps kids see how much they have and where their money is going. By making money visual kids learn that it is finite-once you spend everything in your spend account you don’t have any more money until next “payday”. You can DIY this yourself at home by using three labeled jars, or you can use an app like Abacus to create separate accounts that you can track digitally.
Set guidelines and goals for each jar
Outline what each jar is for and why they’re important. The spending jar can be broken down into two parts: day-to-day fun money and planned spending for specific goals, like a new skateboard. The savings jar is for long-term savings and shouldn’t be touched on a regular basis so that kids can see the power of socking away a little money consistently. The giving jar is for money that will be donated to a cause that’s important to them.
Set up spending guidelines with your kids so that they know what they’re responsible for covering with their allowance and what you’ll cover for them. Some kids are natural savers and would rather save their money and spend yours, so you’ll have to be firm about them using their own money for the things you agreed they’d be responsible for. If your kid is a natural spender and consistently finds themselves out of money before their next allowance, that’s a good lesson in delayed gratification and an opportunity to talk about priorities.
Set goals for their savings and giving jars and decide what will happen when they reach those goals. Once your kids are a little older, you may want to start introducing them to investing by opening an investment account with some of their savings. Your child should select a cause or organization they have a personal interest in to donate their giving jar to. This is a great way for them to build a sense of belonging in their community, and you may even encourage them to volunteer at their chosen organization so that they see first-hand the positive impact their money can have on the lives of others.
Set up regular family meetings
Establish regular check-ins where you can set goals together, discuss what’s working and what’s not, and celebrate wins. Family meetings help make sure everyone is involved and on the same page. It provides a forum for kids and parents to speak up so that you can set expectations and resolve disagreements. Sometimes the hardest thing about money is simply being able to talk openly about it, and that’s what family meetings are for.
Whatever allowance system you decide to use, the important thing is that you’re getting your kids interested in money by talking about it and having them use their own. Over time, you’ll find a system that works for your family. Like anything else, this is all about practice and experimentation! And there’s no better time to start than today.
Introducing Kids to Money Money gives people — both young and old — decision-making opportunities. Teaching kids about money and empowering them to become regular savers and investors will enable them to keep more of the money they earn and do more with the money they spend. Everyday spending decisions can have a far more negative impact on children’s financial futures than any investment decisions they may ever make. Here are 15 simple ways to help educate children about personal finance and managing money:
As soon as children can count, introduce them to money. Take an active role in providing them with information. Observation and repetition are two important ways children learn.
Communicate with children as they grow about your values concerning money — how to save it, how to make it grow, and most importantly, how to spend it wisely.
Help children learn the differences between needs, wants, and wishes. This will prepare them for making good spending decisions in the future.
Setting goals is fundamental to learning the value of money and saving. Young or old, people rarely reach goals they haven’t set. Nearly every toy or other item children ask their parents to buy them can become the object of a goal-setting session. Such goal-setting helps children learn to become responsible for themselves.
Introduce children to the value of saving versus spending. Explain and demonstrate the concept of earning interest income on savings. Consider paying interest on money children save at home; children can help calculate the interest and see how fast money accumulates through the power of compound interest. Later on, they also will realize that the quickest way to a good credit rating is a history of regular, successful savings. Some parents even offer to match what children save on their own.
When giving children an allowance, give them the money in denominations that encourage saving. If the amount is $5, give them 5-1-dollar bills and encourage that at least one dollar be set aside in savings. (Saving $5 a week at 6 percent interest compounded quarterly will total about $266 after a year, $1,503 after 5 years, and $3,527 after 10 years!)
Take children to a credit union or bank to open their own savings accounts. Beginning the regular savings habit early is one of the keys to savings success. Remember, don’t refuse them when they want to withdraw a portion of their savings for a purchase–This may discourage them from saving at all. You can also introduce children to U.S. savings bonds. Bonds are still a good value, costing one-half their face value and earning interest that in some instances will be tax-free if used for a college education. Perhaps more importantly, when given as a gift, bonds will not be spent immediately, reinforcing saving and goal-setting lessons.
Keeping good records of money saved, invested, or spent is another important skill young people must learn. To make it easy, use 12 envelopes, 1 for each month, with a larger envelope to hold all the envelopes for the year. Establish this system for each child. Encourage children to place receipts from all purchases in the envelopes and keep notes on what they do with their money.
Use regular shopping trips as opportunities to teach children the value of money. Going to the grocery store is often a child’s first spending experience. About a third of our take-home pay is spent on grocery and household items. Spending smarter at the grocery store (using coupons, shopping sales, comparing unit prices) can save more than $1,800 a year for a family of four. To help young people understand this lesson, demonstrate how to plan economical meals, avoid waste, and use leftovers efficiently. When you take children to other kinds of stores, explain how to plan purchases in advance and make unit-price comparisons. Show them how to check for value, quality, repairability, warranty, and other consumer concerns. Spending money can be fun and very productive when spending is well-planned. Unplanned spending, as a rule, usually results in 20-30 percent of our money being wasted because we obtain poor value with our purchases.
Allow young people to make spending decisions. Whether good or poor, they will learn from their spending choices. You can then initiate an open discussion of spending pros and cons before more spending takes place. Encourage them to use common sense when buying. This means doing research before making major purchases, waiting for the right time to buy, and using the “spending-by-choice” technique. This technique involves selecting at least three other things the money could be spent on setting aside money for one of the items, and then making a choice of which item to purchase. Buying Smart
Show children how to evaluate TV, radio, and print ads for products. Will a product really perform and do what the commercials say? Is a price offered truly a sale price? Are alternative products available that will do a better job, perhaps for less cost, or offer better value? Remind them that if something sounds too good to be true, it usually is.
Alert children to the dangers of borrowing and paying interest. If you charge interest on small loans you make to them, they will learn quickly how expensive it is to rent someone else’s money for a specified period of time. For instance, paying for a $499 TV over 18 months at $31.85 a month at 18.8 percent interest means the buyer really pays about $575.
When using a credit card at a restaurant, take the opportunity to teach children about how credit cards work. Explain to children how to verify the charges, how to calculate the tip, and how to guard against credit card fraud.
Be cautious about making credit cards available to young people, even when they are entering college. Credit cards have a message: “spend!” Some students report using the cards for cash advances and also to meet everyday needs, instead of for emergencies (as originally planned). Many of those same students find themselves having to cut back on classes to fit in part-time jobs just to pay for their credit card purchases.
Establish a regular schedule for family discussions about finances. This is especially helpful to younger children–it can be the time when they tote up their savings and receive interest. Other discussion topics should include the difference between cash, checks, and credit cards; wise spending habits; how to avoid the use of credit; and the advantages of saving and investment growth. With teenagers, it’s also useful to discuss what’s happening with the national and local economies, how to economize at home, and alternatives to spending money. All of this information will be important as they take on more responsibility for their own financial well-being.
Financial literacy is the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. Raising interest in personal finance is now a focus of state-run programs in countries including Australia, Canada, Japan, The United States and The UK.
Financial Education Beyond Banks
In the past, financial educators did not exist. We only had banks that taught us what to do. However, we were faced with their influence on it since they did do all that they could in order to get some new clients. As time passed, financial educators appeared from outside the banks. Financial advisors have constantly grown in popularity and banks are no longer decisive. Now, smart shoppers constantly change bank accounts as they find better deals.
The Influence of The Internet
The internet helps us to learn new things that we did not have access to in the past. People from all around the world can learn all that they need about financial education. This is definitely really important and you can easily learn how to make proper decisions at the end of the day.
We can easily end up buying something that we do not really need. Even social networks are used to convince us to buy, with Facebook being used to promote rental properties.
Financial Education Is Widely Accessible
Another problem that was present in the past was that we did not have access to something that can teach kids how to make investments or simply control their finances properly. This did change, now you can find children’s book series about money . Children can be taught about the importance of financial education at a really early age. Why not take that into account and take advantage of this?
Compounding the problems associated with poor financial literacy, it appears financial decision making is also getting more onerous for consumers. Five trends are converging that demonstrate the importance for making thoughtful and informed decisions about finances:
Consumers are shouldering more of the financial decisions:
Retirement planning is one example of this shift. Past generations depended on pension funds to provide the bulk of their retirement funding. Pension funds are managed by professionals and put the financial burden on the companies or governments that sponsored them. Consumers were not involved with the decision making, typically did not even contribute their own funds, and they were rarely made aware of the funding status or investments held by the pension. Today, pensions are more a rarity than the norm, especially for new workers. Instead, employees are being offered the ability to participate in 401K saving plans, in which they need to make investment decisions and contribute to the plans.
Complex options:
Consumers are also being asked to choose among various investment and savings products. These products are more sophisticated than in the past, asking consumers to choose among different products options offering varying interest rates and maturities, decisions they are not adequately educated to make. Deciding on complex financial instruments with a large range of options can impact the consumer’s ability to buy a home, finance an education or save for retirement, further complicating financial decision making.
Lack of government aid:
The major source of retirement income in past generations was Social Security. But the amount paid by Social Security is not enough, and it may not be available at all in the future. The Social Security Board of Trustees reported that by 2033 the Social Security Trust Fund may be depleted, a scary prospect for many. So now, Social Security acts more like a potential safety net that may provide enough for basic survival.
Longer life spans:
We are living longer. This means we need more retirement savings than prior generations.
Changing environment:
The financial landscape is very dynamic. Now a global marketplace, there are many more participants in the market and many more factors that can influence it. Taken together these factors can cause conflicting views and difficultly in creating, implementing and following a financial roadmap.
Too many choices:
Banks, credit unions, brokerage firms, insurance firms, credit card companies, mortgage companies, financial planners, and other financial service companies are all vying for assets creating confusion for the consumer.
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Tim Connolly 