Most people with children have a desire to be a fantastic parent. There is so much to navigate when raising kids like parenting styles, which boundaries to set or which foods to feed them. But don’t overlook one of the most important things that can be done: helping children save for their future.
Why Is It Important?
Helping children save money is important because it teaches them to value money, and how to be responsible. The younger the better when teaching this lesson. The University of Cambridge found that money habits are formed in children by seven years old.
If started out correctly, this is a great thing. From children to adults, smart financial decisions will be part of their personality. FamilyMint says 2 out of 3 high school graduates do not know the basics of budgeting, and 18-24 year olds are the fastest growing age group filing for bankruptcy.
The lack of basic financial knowledge will haunt children into adulthood and through life without the right foundation. Those who form the good habit young will likely keep the good habit.
How To Teach Them?
A simple idea for helping children to save is to use a clear jar to store the money they collect from their allowance or birthdays and holidays. Or, do as some experts suggest and use a piggy bank. Each time they add money to their jar let them know how much they have. It is also helpful to set savings goals with children.
Introducing the wants versus needs concept is another helpful tip you can teach. While they need food to survive, they only want that new video game. Next time they ask for a toy or candy while at the store, remind them of their money, how long it took them to accumulate all that money and how much of it they will be losing.
When the jar or piggy bank is full, deposit it into a savings account where it can accumulate interest. But how do you explain interest to a kindergartner? It’s easy. You can define interest as what your credit union pays you to store your money there.
Instead of their money sitting in a jar on the kitchen counter, or in a piggy bank on their dresser, their money is in a secure location slowly growing the same way it does at home just with two contributors.
How Can Parents Help?
Putting ones children on the right track for saving is only half the battle. The U.S Department of Education says children learn from seeing, hearing and overhearing. If their parents spend or argue about money frequently, they are more likely to internalize these habits and act accordingly. Parents should set a good example and explain their choices at an age appropriate level.
After beginning to implement these habits at a young age, parents should verify that their expectations and their allowance are growing with their child. Sometimes this means allowance stops and a part time job is obtained. By the time they go off to college they should have a firm understanding of many types of savings accounts and checking accounts, including rewards checking accounts, and even have a few in their name.
Genisys Credit Union Youth Club Savings Accounts are a great place for children to learn about and grow their money in a fun way.
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