Managing money is a life skill. When is it worth spending? How do you keep spare change from burning a hole in your pocket?
If you’re looking to open an account for your child, or even if they already have one -- here are three steps to take for ensuring your child gets the most out of a savings account.
1. Set a goal
Now that your child’s money will be sitting in an account instead of a piggy bank, let her use this opportunity to save up for something big. Sit down with her and discuss what she’d like to save for. You can create a long-term goal, like saving up for college or a first car. Also establish a short-term goal, like a new iPad or a hover board.
Set a date for her goals, and then set up a savings calendar illustrating how much money needs to be saved each month to reach the goal on time. Discuss ways to add to the savings, being sure to include money from birthday gifts, summer jobs, allowances, and chores. Agreeing ahead of time on a set portion of money received that your child will deposit may make the whole process much easier.
2. Bank together
Whether your child is a first-grader or a teenager, if this is their first time owning an account, they need you to show them the ropes.
Bring your child along with you to the credit union to make a deposit into their savings. Show him how it works and let him see the account balance growing. If your child asks you to withdraw money from his account, make sure he sees how this translates into a dip for his savings.
For teens, you’ll need to walk them through that first deposit and withdrawal. When they’ve got the hang of it, it’s time to take a step back and let them be on their own. They'll feel like a million dollars managing their account independently.
Now may also be the time to consider separating teen accounts into two - one strictly for savings and another for learning how to manage spending with a checking account and debit card. Share with your teen that every swipe of their debit card also means a dent in their checking account balance.
Also, be sure to warn kids of all ages about account security. They should know never to share their account information with anyone and to keep all account documents and cards in a safe place.
3. Monitor your child’s account activity
Don’t aim to be a helicopter parent, but do keep an eye on your child’s account. If he’s depositing a lot less than planned, ask him where his money is going. If your teen is maximizing his daily ATM allowance, speak to him about money management and impulse purchases.
Your teen’s daily withdrawal limit may need occasional adjustment, so keep a careful watch on spending to see if any modifications are needed.
Remember: Every financial lesson you teach your child today equips them with money management skills for a lifetime.
Genisys Credit Union understands the difficulty of this task, so we are focusing on ways to help make this process as smooth and simple as possible by offering savings accounts designed just for kids.
Different ages and stages have different needs, that’s why we offer three stages of youth clubs. Moola Moola is designed for children aged 0-6. The Genisys Wealth Warrior club is for our members aged 7 to 11. Finally, Money Fit is for teens age 12 -16, helping prepare to handle their finances. Our youth club accounts are structured to encourage and reward long term saving with special perks to encourage your child to save and learn that that saving money pays.
Stop by a local branch with your child to add to or open a new youth club account. Learning responsible saving habits at an early age will prepare your child for a sound financial future.
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