Starting Conversations with Your Kids About Saving

A child counting coins and learning how to save money.

Every parent wants their child to grow up to be happy and healthy. So, you’re all over teaching social media safety, you’re role modeling healthy eating habits and lots more. But when it comes to financial wellness, you may be wondering how to teach kids how to save, without overdoing it and burdening them with money worries before their time. Great news! We’ve got you covered with the basics on cultivating financial literacy for kids.

1. Keep it age appropriate.

As soon as your child starts learning to count, they can start learning about the concept of money and how we grown-ups trade it for stuff we want or need. In those early-early years, you might think about giving them a piggybank. However, we’re actually bigger fans of a clear glass jar so the child can be encouraged by actually seeing their savings add up.

2. Make an “income” plan.

We’re not here to judge any parent for their stance on allowances – some are for them, some not, some advocate bigger vs. smaller amounts, and others feel strongly that all money should be earned. Wherever you fall on that spectrum, clearly, your child is going to need a source – or perhaps multiple sources – of “income” to practice saving and spending their own money.

A lot of families find that paying children for doing extra chores around the house is a great way to teach responsibility and reinforce the linkage between work and getting paid. If family income won’t allow for that, another option is to explore opportunities with extended family or trusted neighbors for your child to earn money doing things like yard work, errands or caring for pets.

3. Encourage realistic savings goals.

A huge part of successful personal budgeting as an adult is the ability to distinguish between needs and wants. That can be hard to impart to children, as their needs are almost always covered by parents. However, you can start introducing the concept of choices and trade-offs by helping your child decide on some realistic savings goals and building a plan to achieve them.

For example, it’s possible the new gaming system they want may be out of reach at first, but perhaps a particular game or game series is something they could afford with consistent saving. Achieving these types of small “wins” can be super encouraging and prepare a child to tackle more ambitious savings goals.

Along the way, there may also be opportunities to address choices and trade-offs. Say, for instance, they’re halfway toward saving for a new gaming system when a hot new pair of sneakers comes out and catches their eye. Think: teachable moment. By explaining how buying the shoes now will drain their savings and force them to wait longer to purchase the gaming system, they’ll learn to delay gratification and avoid the impulse buying that sinks so many adults’ budgets.

4. Open a youth savings account.

While a piggy bank (or, like we said, a clear glass jar) is fine for the youngest children, opening a youth savings account provides the additional opportunity to learn banking basics and discover the “magic” of compound interest. Look for free options like BluPeak’s own Youth Savings Account, which can be opened with as little as $25 and has no monthly fee or minimum balance requirement.

Also consider providing incentives to save, such as you matching what they put away dollar for dollar. While the concept of retirement saving is too advanced for most kids until they start a paid job, these types of incentives can be motivating for a new saver and will give your child a head start on understanding the value of maximizing a future employer’s retirement account matching funds.

6. Let them make mistakes.

One of the great things about doing the work now to teach your child about saving and responsible spending is that they can fail without catastrophic consequences. It’s important to resist the urge to step in and bail them out when they make an unwise purchase (trust us, this will happen!) or drain their savings and end up not having the funds for something else they want.

Consequences can be harsh, but they are among life’s most effective teachers. Far better to learn these lessons young, from the safety of a loving home, than later in life when the effects can be far more damaging.

7. Never stop talking about it.

The conversations you have with your child about money will evolve as they mature and accumulate experience with saving, making choices, and spending. So, by the time they’re old enough to get part-time work from a regular employer, they’ll have mastered the basics of savings. While you may still be covering most daily expenses, when they have a paid job and solo checking account, that can be an ideal time to introduce more complex topics like establishing emergency savings.

Take the next step.

Learn about BluPeak’s Youth Savings Account. When you’re ready to open one, simply reach out to us at 866.873.4968 or stop by a branch.

This information is provided for educational purposes only and is not intended to be financial advice. Must meet membership and account criteria. Insured by NCUA.

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