Kids today do not always get to see how the value of money works. They just see mommy or daddy swiping a debit or credit card or tapping their smartphone to pay for gas, groceries, clothes, and more. This can cause kids to get the perception that all they need is a smartphone or plastic card, and they can buy whatever they want no matter how much it costs.
How to Teach Kids to Save Money
Teaching kids about money should start when they are around five or six. You want to reinforce the power of saving and how your child’s money can grow when they do not spend it. One way to do this is to give them a piggy bank. You can pay them in coins that they can put into the bank for doing simple chores like cleaning up their room or helping set the table for dinner.
Tell your child their savings goal is to fill up the piggy bank until no more money will fit inside. Once they fill it, the next step is to take them to their local credit union and open a share savings account with the money they saved in their piggy bank.
With their savings account, they will see that they get paid interest for depositing money into the credit union. Now, you will want to repeat the process of having them refill the piggy bank, and then, once it is full again, deposit the money into their savings accounts.
How to Teach Tweens and Teens to Save Money
With tweens and teens, how to teach your child financial responsibility and how to save can be a bit more challenging. They will want a smartphone, electronic devices, video game systems, the latest fashion clothes, and more. Some tweens and teens think their parents have an endless supply of cash because they just use a card or their phone to pay for everything.
For children in these age ranges, if you did not start when they were younger, you could start with the piggy bank/savings account method. Otherwise, if they already are in the habit of filling their piggy bank and putting it into their savings account, you want to focus more on teaching them how to budget their money.
You will want to get different jars they can put money into for different things they want and label each one with whatever item they want. Tell them that they need to divide up the money they make from doing chores or their part-time job into each of the jars, while also remembering to pay themselves too.
Let them decide how they want to split the money between the jars. This way, if something is a higher priority, they can decide to put more in that jar or split it equally between all the jars. Once they have saved enough for the item they want to purchase, then they can empty the jar—but not before then.
One jar should be marked “savings” for money to put into their savings account, and it should be at least 10% of the total amount they have to put into each of the jars. Once their savings jar is full, then that money gets deposited into their savings account.
For more savings tips for kids, tween, or teens or to open a free Kasasa Saver Account, please feel free to stop by your nearest branch of The People’s Federal Credit Union in Amarillo, Canyon or Childress or call us at (806) 359-8571 today!