How financially savvy are your children?
According to a recent survey, only five percent of adults received any kind of financial education in school. It is a scary statistic, and may partially explain consumers’ record-high credit-card and student-loan debt.
If you want to equip your kids with the tools to become financially secure and independent adults, a good place to start is with a savings and/or checking account. Once they see money going in and coming out, it can drive home a lesson about money management.
Learn about your Credit Union’s range of excellent, free age-appropriate youth accounts. Not only will they earn healthy interest on savings, but our accounts come with exclusive, free online clubs and newsletters that educate while they entertain (includes competitions and prizes)!
Wondering if they can handle the responsibility? Read on…
Savings accounts
Most kids can typically grasp the concept of a savings account early in their development. Here’s how to know if your children are ready to use one:
- They’re curious about money
If your child expresses a genuine interest in money, shopping or anything related to money, this is a good segue into starting a savings account and learning how to save up for a goal. - Their piggy bank is overflowing
If your kids collect cash the old-fashioned way, in their piggy bank, watch out. It may have a habit of “evaporating.” Take this opportunity to teach them that if they save some of their money in an account, it can earn interest (i.e., more money) over time. - They have a savings goal
If your children are saving up for something big, this is the perfect time to introduce a savings account. If they make a deposit into the account they are more likely to stick with their goal and not fritter away cash on small impulse purchases.
Checking accounts
Checking accounts tend to be best suited to older kids who have had more exposure to money. Here are some signs that your kids could benefit from a checking account:
- They’re responsible
No matter how responsible they are, it can be tempting to withdraw more cash than they should. You might wait to open an account with your children until they demonstrate responsibility in other areas such as doing household duties, or maintaining a part-time job. - Their school doesn’t teach personal finance
Most schools fail to teach basic concepts of personal finance, which means that it’s up to you. A checking account can be a great way to reinforce lessons about not spending more than you have, using a debit card, and more. - All their cash is stuffed into their wallet
The wallet-as-checking-account is dangerous for several reasons. Not only can cash easily get lost, it’s hard to track your purchases. By contrast, an account statement lets you view all of your spending and withdrawal activity, which can be a handy budgeting tool.
If you’re eager to introduce your children to the world of personal finance, checking and savings accounts are a good place to start. Just watch for the signs, and start when they are ready. And remember that your Credit Union and our Branch Counselors are always delighted to help!
