Teaching kids financial responsibility is important, and starting early can give them a significant advantage. In this article, we share four steps parents and caregivers can take to help children learn how to save money, including initiating money talk, choosing a savings account, encouraging goal-setting, and supplementing savings with intelligent spending.
Questions Answered in this Article
- Why is it important for children to learn how to save money at a young age?
- Learning how to save at a young age gives kids a significant advantage over their peers, enabling them to develop money management skills early on.
- What is the first step parents should take to teach their children about financial responsibility?
- To start, it’s essential to discuss finances with your kids, according to New Jersey-based financial advisor Caroline Tanis.
- What should parents look for in a savings account for their children?
- Certified financial planner Kelly Klingaman suggests opening a savings account for kids that earns interest, allowing them to watch their balance grow and learn about compound interest at a young age. A savings account for children should have low or no monthly fees, no minimum deposit, a high yield, and offer online access and mobile apps to help parents and children track their balance.
- Why is encouraging goal-setting important in teaching children about saving money?
- Setting goals can teach children the importance of delayed gratification and help them understand the value of their purchases, says Natalie Runyon, a mother of two in New York. It can also prepare them for future spending temptations.
- How can parents supplement their child’s savings account with intelligent spending habits?
- Parents can supplement their child’s savings account with a mobile-focused spending account or app that offers debit cards, budgeting tools, and the ability to monitor and limit spending.
How to Teach Kids the Importance of Saving Money: 4 Steps for Parents and Caregivers
Learning how to save at a young age gives kids a significant advantage over their peers, enabling them to develop money management skills early on. However, this skill only creates sometimes, and parents and caregivers play a critical role in guiding children toward financial responsibility.
To assist children in learning how to save money, here are four steps parents and caregivers can take. These steps can be helpful whether children are starting with their birthday gift, a first paycheck, or even a few coins discovered in the couch cushions.
Initiate a Money Talk: Discussing Finances with Your Children
To start, it’s essential to discuss finances with your kids, according to New Jersey-based financial advisor Caroline Tanis. Asking your children how they want to spend their money and how much they would like to save can help them understand financial management and feel empowered about it in the future.
Opt for a Robust Savings Account: What to Look for When Opening an Account for Kids
Certified financial planner Kelly Klingaman suggests opening a savings account for kids that earns interest, allowing them to watch their balance grow and learn about compound interest at a young age. A savings account for children should have low or no monthly fees, no minimum deposit, a high yield, and offer online access and mobile apps to help parents and children track their balance. While some savings accounts are specifically marketed for kids, other online savings accounts with low fees and high-interest rates may also be suitable. Even an infant can have an account opened in their name by a caregiver, so it’s never too early to start saving.
Encourage Goal-Setting: How to Help Children Understand the Importance of Delayed Gratification
After establishing a savings account, parents can help their children create a specific savings goal. Setting goals can teach children the importance of delayed gratification and help them understand the value of their purchases, says Natalie Runyon, a mother of two in New York. It can also prepare them for future spending temptations.
Many top savings accounts come with mobile apps allowing parents and children to track their progress with a savings goal calculator.
Combine Smart Saving with Intelligent Spending: How to Supplement a Child’s Savings Account with a Spending Account or App
Teaching kids how to spend money is also essential when saving. Parents can supplement their child’s savings account with a mobile-focused spending account or app that offers debit cards, budgeting tools, and the ability to monitor and limit spending.
According to Kelly Klingaman, when kids have control over their spending, they are more likely to achieve their savings goals. This also allows children to experiment with money and helps them manage their spending habits.
Teaching children how to save money is essential to personal finance education. It can help them become comfortable with money and learn how to balance their spending desires with saving for their future. By initiating conversations about money, opening a savings account, setting goals, and teaching intelligent spending habits, parents can help their children develop financial literacy that will benefit them for years.
Summary
- Learning how to save at a young age gives kids an advantage in developing money management skills.
- Parents should initiate conversations with their children about finances to help them understand financial management.
- A savings account for kids should have low or no monthly fees, no minimum deposit, a high yield, and offer online access and mobile apps to help parents and children track their balance.
- Setting savings goals can teach children delayed gratification and the value of their purchases.
- Parents can supplement their child’s savings account with a mobile-focused spending account or app that offers debit cards, budgeting tools, and the ability to monitor and limit spending.
- By teaching children how to save money and manage their finances, parents can help their children develop financial literacy that will benefit them for years.