Help Your Kids Start Saving

It is no secret that kids pay attention to the grownups around them. They learn a great deal simply from watching their parents’ behaviors. And this is even true when it comes to financial habits. So as your family grows, your expenses change, and your budget shifts, why not include your young ones on the conversation?

Even if a child isn’t able to fully understand the concept of wealth, they can come to learn the important role of money. Instilling this value at a young age is a great starting point, and if you make it a priority, it can even be fun for them.  

Here are a few considerations to get your kids saving at an early age.

Have open conversations

Speak to your children about money at an early age. And this doesn’t mean explaining the necessity of a 401(K) or why mortgage insurance can be tacked on to a monthly payment. Instead, think simply in terms of what money does and the purpose it serves. Discuss the role it plays within your home.

Simply put, money helps a family buy the things it needs. This is a simple concept to understand. And you can help them further understand that money is earned, and that it should not be taken for granted. The old saying, “money doesn’t grow on trees,” is one that is instilled into just about everyone, and for good reason.

Once children know of money and have an understanding of how it works, they will understand practical phrases such as “this is too expensive,” or even follow-up phrases such as, “but if we save enough by putting a little bit away at a time, then we can buy it later on.”

Use a piggy bank to set goals

The piggy bank is the old stereotype for a child’s savings. It is seen in cartoons and coloring books and is a fun way to demonstrate how money can be saved. But the reality is this: It’s a stereotype for a reason.

There is an element of tangible learning affiliated with the piggy bank. Money goes in and it doesn’t come out. The more that goes in, the more money has been saved for the future. This simple practice helps demonstrate that little by little is sometimes all it takes.

The piggy bank won’t accrue a great deal of money, and more advanced concepts (such as interest) are not even applied, but this simplicity is the point. It will help generate an understanding of the basic concept of saving for the future.

Try this with your children. Explain to them what the piggy bank represents and put money in it with them from time to time. You can make it a sort of game by letting them pick something (a toy, perhaps) and treat it like a goal to reach. Perhaps set up simple chores around the house so they understand how money can be earned and then saved.

Once this goal is reached, it will mean a great deal to them because they have been building up for it. They have “won” the game, in a manner of speaking. Details about savings accounts and the benefits of different investment vehicles will come later, but for now, just start with the basics.

Include a child’s values in the budget

Children have wants and needs of their own (and they will not be shy about letting you know what those things are). However, they might not be able to differentiate the two at a young age. By having conversations about the family budget, you can demonstrate this difference and how they each play a role within the budget.

Sometimes a visual exercise can be helpful to a child. For instance, if they claim to want three items, write those items down. And then write the cost of each item next to it. Consider the cost you are willing to attribute to this project and write that number down as well. The children will begin to understand that a certain amount of money only goes so far, and they will be able to better choose what they want more.

Do this exercise with needs as well so they can see that these things they might take for granted (food, clothing, shelter) also cost money. More importantly, the “needs” list will and should have more money allocated to it than the “wants” list.

This exercise is helpful in another way as well. It will instill in them the notion that items, regardless of what they are, cost money. This will demonstrate the importance of the role that money plays in the household and help the children see the big picture.

Additionally, exercises like this will also help you keep the family budget in perspective. After all, the budget should reflect the values of the entire family.

Lead by example

It is easy to tell a child the correct behaviors when it comes to financial responsibility. But, are you maintaining this behavior as well? As mentioned, children pay attention, and if you are making good financial decisions they will pick up on it.

Children understand the reward that comes from good behavior, and if you are having open conversations with them about the family budget, this mindset will further sink in. For instance, if you have a goal of your own that you are saving for, make it known to the children. A good idea is to make this goal something that benefits the family as a whole, like a family getaway. It could even be something small, such as a new game that everyone can play.

Tell the children about your plan to save, and how this saving will pay off and the entire family will be able to enjoy the outcome. This will build a growing excitement and when the vacation or game or puppy (or whatever you decide!) comes to fruition, it will mean a great deal to the kids. They will experience this reward for good financial behavior first hand.

Evolve with the children

Just like your budget changes with your lifestyle, your children’s financial habits should as well. There will come a time when a savings account is more realistic than the piggy bank. Help guide this transition.

From starter savings accounts to checking for the students in your life, Family Banking brings financial experiences home.

They’ll get accounts that make it easy to track their money, a debit card and many of the same benefits you do, like 30,000+ surcharge-free ATMs,¹ digital banking² and more.

You’ll be able to monitor their spending, lock/unlock their debit card, get transaction notices and balance alerts with more peace-of-mind controls to come.

But Family Banking is more than a student checking account - It helps open conversations about money gives your kids a sense of financial responsibility and starts good habits that will follow them throughout their lives.

Instill these values when children are young, and then hand the reigns over with new levels of maturity. This is the best way to help them learn and grow smart financial habits of their own, and equally as important, have confidence in their ability to do so.

Learn more about how a family budget can benefit your child, but also how it can help keep your whole family moving toward your financial goals.

Want to get your kiddo started with saving? Open a savings account today.

 

Sources:

“How to teach young kids about money so it sticks with them,” NBC News, June 2019

https://www.nbcnews.com/better/lifestyle/how-teach-young-kids-about-money-so-it-sticks-them-ncna1023231

“10 Tips to Teach Your Child to Save Money,” Investopedia, October 2015

https://www.investopedia.com/personal-finance/10-tips-teach-your-child-save/