Where did the summer go? It’s already time for kids to go back to school. It’s also time to help your kids learn about money.
Currently, only two-thirds of all states require personal finance classes for high school graduation.* The good news is that this number is trending upward.
The more kids know about money and personal finance, the better they can make thoughtful financial choices, manage their money, and avoid financial pitfalls.
It’s never too early to start teaching your children about saving, budgeting, and money matters. It is easy to overlook these valuable lessons since it’s not a core subject taught until high school. But why wait? Here are some money-savvy ideas you can start teaching your children while they are still young.
Start the savings habit.
A piggy bank or a money box is a classic way to help younger children save money. Let them choose their style of bank. Explain it’s not to be opened or dipped into unless there’s some emergency – which doesn’t include buying the latest toy or tasty treat.
You can also help create a DIY saving center. Grab three jars or boxes of the same size. Designate one jar for saving, one for sharing (donating), and one for spending.
Every time the savings jar is full, go to the local branch of your financial institution to make a deposit. If you’re banking online, print out the balance so your child has something to hold as proof of their savings efforts.
For older kids with college on their minds, you can open multiple savings accounts with different purposes, such as savings, charity, and college.
Give them ways to earn.
Chores and a weekly allowance are great ways to teach the value of work and reward. For younger kids, make a roster to check off daily or weekly chores and when is payday. As they get older, you can show them other ways to make some money to save. A garage sale is always fun, and all the family can get involved. They could also offer to help neighbors for a little extra pocket money. And for older kids, a part-time job teaches responsibility as they increase their savings.
Let them spend a little.
While saving is important, we also want to teach smart spending habits. So, let your younger children take some of their well-earned money to go shopping and buy what they want, as appropriate. Explain to them, at a level they can understand, how money flows within a community. They will soon see the cycle of earning, spending, and saving as they gain experience and confidence by doing it themselves. For older kids, more subtle guidance is probably best. While they may say it’s their money to spend as they see fit, remind them of their long-term goals, whether saving for college, a car, or a gap-year trip. Also, introduce additional responsibilities (bills) as well. From paying for their gas to clothes to entertainment, teens need to understand independence comes with financial responsibilities.
Show them the power of giving.
There are many ways to show your children how to give, such as through donations, charity, and buying tickets for events that benefit a good cause. Building awareness of kindness through giving is a beautiful lesson for children of any age.
Ultimately, children will develop their own methods of earning, spending, and saving money. Hopefully, they will remember your wise lessons and financial success will flow easily to them. Giving them a firm foundation of knowledge from a young age is one of the best life lessons you can pass on to your children.
More ways to teach about the value of money.
Our Youth accounts are specifically for kids and teens to help teach them about finances while growing their money.
- Kid Membership Savings: A smart place to start for younger savers. All it takes is $5 to open, and it teaches them about saving for tomorrow and the power of interest, and it puts them on the path to financial freedom.
- Teen Checking: Monthly withdrawal limits help teens budget; the first box of checks is free, and the account comes with overdraft protection.
- 24-Month Certificates: Save for the future while earning 3.00% APY** with the ability to make additional deposits.
Our Youth accounts also come with exclusive membership in our Your Money Clubs (M3 Money Club for kids 12 and under and Elements for teens and young adults). Each is packed with money tips, games, and scholarship info that makes learning about money fun.
Final thoughts.
Back to school means carpool, packing lunches, and classroom snacks. And, it’s an opportunity to teach kids about the value of money. A little education now can pay lifetime dividends. Modeling good financial behavior and sharing what you know can help kids have a healthy relationship with money that helps them carry lower amounts of debt, have higher savings balances and credit scores, and become financial independent throughout life.
This article was developed in partnership with our friends at Balance.
*Council for Economic Education, “Financial education requirement soar in America’s high schools, ”Councilforeconed.org. 26 February 2024. Accessed 17 July 2024.
**APY = Annual Percentage Yield. APY is the annualized rate based on a compounding period of one year. When the deposited money earns dividends and the accumulated dividends starts earning dividends as well, we are talking about compounding. Fees could reduce the earnings on an account. All yields except Certificate yields are subject to change retroactively to the beginning of the month.
