3 Ways You Can Teach Your Kids to Save for National Financial Literacy Month
April is National Financial Literacy Month, a month-long observation in the United States to highlight the importance of financial education and to teach financial responsibility.
There’s no better time to start educating your kids on finances, saving, and being fiscally responsible.
If you’re thinking they’re far too young for something so serious, consider this. A study by the University of Cambridge showed that kids form their money habit as early as 7 years old! That means by 7, they’ve already developed a behavior towards money that they will carry with them through life!
As parents, teaching your kids while they’re young about financial education will develop and mold them into financially responsible adults. How they see you talk about and handle finances is going to give them a direct impression of how they should handle finances. So, don’t be afraid to start teaching them. The sooner the better.
There’s a lot you can do to teach your kids to save and be financially responsible. Today, we’re sharing with you 3 ways to can kick-start good habits with them to teach your kids how to save.
While you’re at it, explain to them about Financial Literacy Month. We’re betting that they’ll take it even more seriously once they learn there’s an entire month devoted to the important of financial education!
1. Discuss Wants vs. Needs & Help Your Kids Create Savings Goals
One of the first things your kids need to understand is the difference between a want and a need. After all, this is how adulting works! If, as adults, we all just ran around getting what we wanted instead of prioritizing our needs… well you can imagine the poor state the world would be in.
Teach your children that needs come first – always. This is more detailed than just saying, “food, water, and shelter”. This includes grocery budgets, electric and water bills, mortgage or rent payments, health insurance, etc.
If your child is a little older, consider showing them your monthly expenses so they can get a true grasp of how much it takes to run a household. When they see how much of your monthly income has to go back out for bills and necessities, it can be a real eye-opener to help them understand just how important money is to maintain a living.
Once your kids understand the difference between a want vs. a need, sit down with them and help them create savings goals. Let them know that as parents, you take care of their basic life needs and usually even some wants, but it is their responsibility (until they are in charge of their own households) to earn and save their own money if they want something.
Try starting with one major goal at a time. What does your kid really want to save up money for (don’t get yourself into trouble here – remember a pony might not work out in your favor). Ask them thoughtful questions like how important the item is to them and if it really is something they feel is worth spending their time and money on.
Also ask them how they think they’ll feel once they buy it but have no more money left to go towards their next goal. Understanding that once money is spent, it is gone and not replaceable, is an important lesson too.
Give Them Creative Goal Options
This is also a good time to explain that their goal doesn’t always have to end in buying something. Sometimes a good goal is to keep saving. This will largely depend on the age of your child, but older kids might have loftier goals such as saving for their first car or a high school graduation trip, maybe even a college fund.
Talk to them too about charities and giving. While it may not be what they decide to do in the end, teaching kids about supporting causes that we care about is part of how the world goes around.
Maybe they are passionate about animals and would like to contribute a portion of their savings to the ASPCA. Help them brainstorm creative options and let them choose what is most important to them as individuals.
2. Provide a Means for Your Kids to Earn Money
Unless you are teaching an older teen about money, odds are, your kid can’t get a job of their own yet. So, to help them learn to save, you might have to provide a means for them to earn first.
This could be setting up a chore chart that they need to complete to earn a weekly or monthly allowance, helping them set up a lemonade stand or sell some special craft they have a talent for, or even using money they receive from holiday and birthday gifts.
3. Open a Savings Account for Your Kids
However you decide to help your kids earn their own money, once you do, take them to a bank and have them open up a savings account. This step is so important! Stashing the cash at home might seem like the better option, but they can learn a lot more from depositing their money in a bank.
Let them be completely hands on with this. Show them how to fill out a deposit slip, let them hand it along with the money to the teller. Let them ask and answer questions. This is real world experience and that is the best way to learn.
Teach Kids to Track Their Savings
Once their money is at a bank, start reviewing monthly bank statements with them. Show them how to read one and how to check it for accuracy. If they’ve spent some of the money, have them add up how much they withdrew that month so they can learn how spending takes away from their goals.
By allowing your child to be hands on with their own money, they’re really going to understand how their choices affect the outcome.
Patience, Flexibility, and Forgiveness
Getting a jump-start on helping your kids learn to be financially responsible is going to be so beneficial for them, but remember, they are still learning, and we’ve all made mistakes and so will they.
It can be tempting to jump in with your opinion on how they should spend their money or to bail them out when they spend their $20 birthday money from grandma on chips and pop – but don’t.
Let them learn from their financial mistakes because that is a very important lesson as well. No one bails you out when you are an adult and they need to learn the repercussions of poor choices. Be patient with them and allow yourself to be flexible with their decisions.
For more helpful, money-saving tips, and to show your kids the variety of financial services available, stop by your nearest Currency Exchange location today!
With over 350 locations, many open nights, weekends, and holidays (and several stores with 24/7 availability), you can rest easy knowing your financial needs can be taken care of when you need them most. We’re in the heart of every community. Don’t believe us? See for yourself.