Kids and Money
Chances are you probably know someone in your life who isn’t the best with their money. You know the type; as soon as they get paid, it’s gone; or maybe they know they need to save money, but they don’t know where to start, or how much to put aside. Maybe, they never learned how important it is to save money – especially from an early age.
As everyone knows, bad habits are hard to break. The easier approach is to teach financial literacy from an early age before the bad financial habits have a chance to form. Check out these tips to help teach the children in your life how to be smart with their money. Who knows, you might just learn a few things yourself.
1. Open a savings account for your child as soon as possible.
Your child doesn’t have to be a teenager to have an account. As soon as they have been issued a social security number, you can establish a membership at a credit union for them.
2. Set up a direct deposit or an allotment for your child as soon as possible. This is a good time to start a new habit for you, too!
3. When your child earns money from an allowance, birthday or holiday, put the entire amount in savings. If you opened up the account early, they will not miss the money.
4. Take advantage of higher dividend rates on our certificates. Longer terms will yield the highest interest, so it’s best to open a certificate for 60 months (or longer, if available!). By the time your child is 5, the certificate will be maturing, and you can teach them about how much they have earned from all of that saving!
5. When your child no longer wants to save 100% of their money, sit down with them and find an amount (or percentage) that they are comfortable saving. Make sure it’s at least 10% of what they received.
6. Each month, show them their statement so they can see how much the balance grew. This is a good opportunity to explain compound interest (in an age appropriate manner, of course). You may find it helpful to set a savings goal and use a visual aide to help them see the impact of their savings.
7. Are they ready to spend their money? That’s okay. This is your chance to go over the concept of a “want” versus a “need.” If they still want the item, you may want to give your child ways to earn money so that they can still leave a portion of their money in savings.
8. Have them get involved! Let them accompany you to a branch to make deposits, open a certificate, or just to see you deposit cash or a check into your account.
9. If they have a setback, that doesn’t mean they give up on saving their money altogether. Explain that it’s always better to save money, but that doesn’t mean they can’t have fun too. They can start saving again as soon as they have a chance.
10. Still having a hard time? Why not make a game out of it? Watch how long they can go without using their savings. Challenge them to go longer between each withdrawal. You might even choose to reward them with extra money in their allowance for meeting their goals.
Hopefully, you’ve enjoyed reading these tips, and maybe you’ve picked up on some ideas for you as well.
Did we forget anything? Let us know what you think, or what you want to hear more about, and we’ll feature it in an upcoming blog.
Stay tuned for next week’s blog topic “What’s in a Credit Score?”.
Krista Kyte is a personal finance blogger and personal banker with over 17 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help them reach and maintain financial security, and start living the life they’ve always wanted.