While financial basics are taught in grade school, parents are primarily responsible for teaching kids about finances. Consider the real-life experiences related to budgeting, buying, saving and spending that you can provide to your kids every day.
Kids pay attention to your attitudes and behaviors about finances more than you think. It's important to instill good saving habits early on to set them up for future financial success. 5- or 6-year-old kids are usually capable of understanding the concept of saving money.
Check out these 4 ideas for teaching your kids about savings:
- Involve kids in financial conversations. Instead of sending your kids to play in another room when financial conversations arise, consider asking them to stay and encourage them to pay attention. Initially, they may not understand financial matters like accounts, loans and credit scores, but they will better understand as they grow. Answer questions they may have, and over time, begin challenging them with questions.
- Embrace teachable moments. Explain the "why and how" of your everyday financial decisions, even if your kids don't specifically ask for an explanation. Grocery store outings are a great time to talk through quick money lessons. For example, explain why you chose to buy a less expensive store-brand soup and how this decision helps save money. Understanding everyday money decisions can help kids comprehend aspects of your larger financial conversations referenced above.
- Write down and track savings goals. Consider limiting parent-funded purchases for "must-have" toys or gadgets. Think about giving your kids a savings jar or piggy bank to save their funds in and help them write down their savings goals. As they get closer to their goals, help them track those milestones and give verbal positive reinforcement. This teaches not only the value of saving, but also goal setting.
- Establish a chore chart. Parents, consider brainstorming chores that your kids could complete and a pay rate equal to each chore. Chore charts are a fun, visual way to keep tabs on what chores are assigned and completed. Additionally, receiving a weekly allowance for chores may help them understand their work's value and save for their goals.
Download a wants vs needs worksheet to help teach your children about saving money.
Teaching the importance of saving is a life-long lesson, but hopefully, early education will lead them to become financially stable adults. Jumpstart their savings journey today by opening a Youth Club account for your kids. We offer Kids 1st Club accounts for kids ages 0-12, and iMember Club accounts for kids ages 13-19.