Over the years, parents teach their children many things. How to grow gardens. How to care for pets. How to be polite and thankful. Even how to prepare simple meals. One important lesson that parents need to teach that often gets overlooked is the importance of saving money. These tips will help parents teach children of all ages how to save more, manage their money, and grow their savings effectively.
Make It a Visual Experience
Children love the visuals, and it is an important tool for them to see how their savings can grow over time. Younger children enjoy putting money in jars, piggy banks, or even special envelopes to watch their savings increase. Older children can watch their balances flourish online with their own checking and savings accounts.
Another way to use visual cues to perpetuate saving money is through goal setting. Once your child chooses a goal, whether for a coveted toy or a new video game, place reminders where they will regularly see them. Creating a progress chart to illustrate how far they’ve come is a great way to keep your child motivated.
Encourage Saving at Every Opportunity
Children often receive cash gifts for birthdays, holidays, allowances, and other events throughout their lives. Encourage them to save a portion of their money from these events. While a standard benchmark for most adults is to save 10 to 15 percent of their income, the goal for children who do not have the same financial obligations can be more aggressive, such as saving 30 to 50 percent of their money.
Teach Your Children to Automate the Saving Process
Once your teen gets his or her first job, encourage them to enroll in direct deposit and payroll deduction. These tools allow for a portion of each paycheck to transfer automatically into their savings account. A good goal amount is 30 percent of each check. However, you and your teen can determine a portion together to promote that saving habit.
One of the best ways to encourage children who are reluctant to save is to offer incentives. For instance, if your child is saving for a toy they want, you can match their funds once they reach a specific amount. For teens with more significant goals, such as a new car or computer, you might consider contributing a percentage of their savings goal.
Open a Certificate Account for Your Child
Once your child has amassed a substantial amount of savings, between $250 and $500, for instance, consider opening a Certificate Account. This will be an important early lesson in how savings can earn higher dividends and grow over time. These accounts have limited withdrawal capabilities, making them excellent tools for longer-term goals, such as saving for their first car.
We’re Here to Help!
As your credit union, our goal is to help you and your family develop positive lifelong financial habits that include growing your savings.
Please stop by any of our convenient branch locations or call 801-451-5064 to learn more about our youth accounts designed specifically to help teach your children valuable money management skills.