You’ll be hard pressed to find a financial expert who does not stress the importance of teaching kids money saving habits at an early age.
Over decades, studies have shown that children who have a savings account for college (even with a balance less than $500) are three times more likely to go to college and four times more likely to graduate college.
If the motivator isn’t college, saving and financial responsibility is a skill that will serve children well the rest of their lives. Learning financial literacy in little doses throughout childhood will make a big impact throughout the course of their lives.
We all know that when you try to teach a child something, it sometimes backfires into resistance and rebellion. So, we put together a few tips to make it fun and interactive.
- Make it visual
Many of us are visual learners, right? This is especially true for kids. Instead of putting their money in a piggy bank, where they can’t see their savings, consider an option that allows them to watch their savings grow – literally. There are machines that count your child’s money as they put it in. Or, there are tools like Deerwood’s Tackle Bank, that allow kids to easily see their savings. Plus, the tackle bank helps them learn the value of each coin and how to sort into pennies, nickels, dimes, quarters, and dollars.
- Make a goal
If you start teaching your kid about saving when they’re two and the goal is college, the delayed gratification might deter them a bit. Make financial goals with your kiddos. Maybe it’s to buy a blizzard at the DQ or the newest toy at Target. Work with them to think of ways to reach their goal, then celebrate the little victories along the way. Plus, calculating how far they are from their goal is a great math lesson, too!
- Give them control (or at least input)
To build on our last tip of making savings goals, give your kiddos some input on how their money can be saved, spent, or donated. Giving them input on this will help them take more ownership and pride over their savings account. You can guide them and give them ideas but try to let them make decisions about what to do with their money.
- Be an example
As with almost everything in parenting, the best way to teach our children about financial responsibility is to practice it. Set up a family budget and walk them through the things that cost money. Then, as a family, budget for things you want versus things you need. As you budget, teach your children about opportunity choices. When they want the impulse cookies at the grocery store, explain how if you buy the cookies today, you won’t have the money to go out for ice cream later this week.
- Open an account early
Piggy banks (or Tackle Banks at Deerwood) are great for keeping spare change and small allowances, but your child should also have a kids savings account where they can store money earned from chores or given as a gift. There are many different types of savings accounts, ranging from nice and simple accounts like Deerwood Bank’s Buckaroo Club, where kids learn the value of interest, to 529 accounts that are designated specifically for educational expenses. Your personal banker will help you determine which is right for your kids or grandkids (hint: Grandparents, Buckaroo accounts make gift giving at Christmas time or birthdays nice & simple!).
- Encourage generosity at an early age
Giving generously is a powerful value to instill in our children. Giving not only offers financial benefits to charitable organizations, but it softens our children’s hearts, helps open their eyes to see other’s needs, and helps them better appreciate the ability they have to give in their own lives.
One of my favorite ways to encourage generosity in childhood is to set three clear mason jars in a child’s room marked Save, Spend, and Give. Every time your kids have money for their piggy bank, put 80% in the Spend jar, 10% in the Save jar, and 10% in the Give jar. Then, make it a fun experience for your kiddo to take that Give jar to a local charity and donate it.
Getting kids started down a path of financial responsibility will lead to a life of financial freedom. Our children are our greatest treasure, and we want what’s best for them. Helping them understand currency, budgets, finances, and the entire role that money plays will serve them throughout their entire lives.