The 25th annual National Teach Children to Save Day, sponsored by the American Bankers Association, falls on April 27th and it’s a whole day dedicated to encouraging children to develop good money-saving habits. With an early start to saving and an understanding of budgeting their money, children will build life skills as they head into adulthood. In honor of a quarter-century of financial education, here are some tips and tricks you can use to get your little ones excited about personal finance.
- Earlier the better
The earlier you can teach your children the value of money, the better. As soon as a child begins to understand numbers, they can begin to understand the basic concepts of saving. According to studies, by the age of three, kids are beginning to grasp basic money concepts and by age seven, many of their money habits are already set. However, they’re not set in stone just yet and there is still plenty of room for improvements.
- Start with the basics – wants vs. needs
Begin the money talk by discussing the difference between wants and needs with your children. You can do this simply by explaining a need as something you must have to survive, such as food, water, and a home. Children will understand wants as something special, but not necessary, like an ice cream cone or a trip to the zoo. Once that foundation is established, you can use your own budget as an example to illustrate how wants come second when it comes to spending.
- Create opportunities for them to earn money
As simple as it may sound, kids need to have their own money and a place to store it before they can understand how to make decisions about it. Start with a piggy bank, and as they age, set them up with a savings account of their own. Whenever your child earns money doing weekly chores, walking the neighbor’s dog, or cashing in a birthday check, encourage them to put the money in their bank. Having a safe space to store their hard-earned money will allow them to physically see their savings add up and track their spending.
- Help them set savings goals
Helping children identify a savings goal is a great way to get them motivated and keep them excited about money. Once they know what they are saving for, help break down their goals into smaller and more manageable milestones. For example, if they want to buy a $40 new toy and they get a $10 allowance each week, help them figure out how long it will take to reach that goal.
Developing these habits at a young age creates a foundation for a lifetime of saving. Setting children up with a savings plan and teaching them money management skills is a process that can take time – get a jump start by celebrating National Teach Children to Save Day!
