Teaching Kids to Save – 4 Real Tips for Success
Laura Edgar is a senior writer for NerdWallet.com, a consumer finance comparison website dedicated to helping you save money every day.
One of your many important roles as a parent or caregiver is to teach your children about money management. A surprisingly high number of parents shy away from money discussions in fear that they don’t know enough to be good teachers. However, the best thing you can do to teach your child about money is talk about it frequently, be honest about your experiences, and discuss the basic cost of living. Keep in mind that your child will learn a lot from your successes and failures, just like you have. Keep reading for more great tips, and consider having your first money conversations today.
1. Give your kids real money first
It’s important for kids to work with real money before you introduce them to accounts, credit cards and loans, and other adult forms of money management. Kids need to be able to visual money as a tangible object that comes and goes, and working with cash is the best way for them to do it. Cash also helps them visualize the concept of saving, since they will literally see their money grow when they keep it in a piggy bank.
2. Take advantage of teachable moments
It’s always great to talk about money, but it’s even better to discuss it during a “teachable moment”. You make important money decisions every day, and if you appropriately involve your child in the process, they can learn a lot. For example, the next time you use your credit card to pay for dinner, show your child your receipt and explain how you’re paying for the food. Teachable moments are especially helpful for older children who understand basic money concepts but still have a hard time understanding money in abstract terms. Credit cards are abstract because you don’t actually see the financial transaction taking place, but you still need to understand what’s happening and connect it with real-world money.
3. Visit the credit union together
Once your child has experience handling and saving real-world money, take them to a United Financial branch to open a savings account or certificate of deposit for them. Kids 12 and under are eligible to join the Dime-a-Saurus Kids Club. In addition to a great account with grownup-level dividends, all club members receive a cool prize each time they make a deposit. In case that wasn’t exciting enough, club members also get a punch card. For each deposit of $2 of more, they’ll receive one punch, and once they fill up the card, they’ll get an extra $10 deposited into their account. Click here for other awesome club benefits and complete details.
4. Take your child’s allowance seriously
Many financial literacy experts will tell you that an allowance is an important tool for teaching kids money management. Allowances force kids to work with a limited amount of money and make their own decisions about how to spend it. However, kids won’t learn money management if their allowance doesn’t come with restrictions. Don’t give your kids more money just because they ask for it, and don’t give them an allowance unconditionally.