Teaching Children to Save
Twice a year my wife takes our son to the bank to deposit the money in his piggy bank into his savings account. He gets a big glee from carrying the ceramic pig into the bank and handing it to the teller because he feels like he’s doing something good.
Saving money can sometimes be extremely tough for anyone, especially with inflation at 40-year highs.
However, you are in control more in control of it than you think. Morgan Housel writes a chapter about this in his book The Psychology of Money.
So, how do we teach children to be diligent savers? What tips can we teach them at a young age that they’ll take with them forever? How can we get across to kids that it’s much more about psychology than finance?
As part of Financial Literacy month, the American Bankers Association is celebrating 25 years of “Teaching Children to Save Day.”
Plains Commerce is here to give some tips on how to help kids of all ages learn some good money habits in the process.
The Young Ones (Ages 4 – 12)
Keep it simple, especially for young kids. Money doesn’t have to be complicated, and neither should saving it.
Tip 1: Money
We live in a digital age now, so Gen Z rarely sees a physical dollar or coin. However, that should not stop us from introducing to them what money is. Show them coins and dollar bills and tell them how and why adults earn it.
Tip 2: Earn
Set up a chore chart for your kids. They take out the trash out, vacuum, or walk the dog. They earn money. Simple as that.
Tip 3: Save
The best thing to teach them is to split that money in half. You just worked for that money. Maybe it’s $10. They put $5 in a “save,” jar. Teach them to pay themselves first. Maybe once a month you take the jar to the bank, and they can deposit it into their savings account.
Tip 4: Spend
Of course, now is the fun part. Take the half that you didn’t put in the save jar and put in a spend jar. Allow them the ability to count the money they have and take them shopping-let them look at the prices and see if they can afford a toy.
The Teens (Ages 13 – 18)
Teens today have all the tools at their fingertips. There are so many apps available to help teens save. It still shouldn’t be complicated though.
Tip 1: Auto Transfers
If your teen is working part-time while in school, help them set up automatic transfers to their savings account when their paycheck hits their checking account.
Tip 2: Set Goals
Goals are always good. Your son or daughter may want a vehicle. Help them set goals on how much they need to save to help pay for it.
Tip 3: Be a Role Model
Help your teen by showing them you save. Kids are likely to mimic the behavior of their parents. If they see you saving, they will want to do it too.
Tip 4: Just Talk
Money can sometimes be a divisive topic, but it shouldn’t be. When your teens ask money questions, don’t panic. No one in the world has all the answers and you shouldn’t either. If they ask about a topic you don’t know, research it with them, or take them to Plains Commerce Bank where our bankers will be happy to answer their questions.
In the end, money doesn’t have to be complicated.