Young Savers
In recognition of April as Financial Literacy Awareness Month, here are some tips for teaching children of all ages how to save and manage their own money.
Ages 3-6: Make It Visible. A simple action such as putting change in a jar can help teach youngsters some important lessons. Encourage kids to keep adding change to the jar and watch it grow over time. When it’s full, count the change together and use part of the funds to buy something as a reward. As the children get older, teach them about budgeting and splitting the change up into separate jars marked for saving, spending and sharing.
Ages 6-8: Earn It. Introduce the idea of an allowance or earning money for doing chores around the house. Not only does this put money in their pocket, it introduces the concept that you can earn money by helping others. Explain that many adults have “service” jobs — much like the chores the kids do at home — and that it’s an important part of the economy. It also reinforces the idea of “an honest day’s pay for an honest day’s work.”
Ages 8-12: Put Money To Work. Start by explaining how money grows through earning interest. Open a savings account at a bank, and encourage regular deposits to help strengthen their savings habit. An added bonus to money in the bank: it’s less accessible for impulse spending, and it’s protected against loss by FDIC insurance — something that can’t be said of piggy banks at home.
Teens: Prepare For The Future. Open a joint checking account at a bank with a parent/guardian. Make sure the teens know the proper way to write a check, how a check register works, and how to use an ATM or debit card. Instruct teens in good checkbook-balancing habits — make sure they write down all transactions (including debit card purchases), ATM withdrawals, and automatic bill payments. Encourage them to balance their checkbook at least monthly, and to file statements. If the bank offers online banking, go over the advantages of monitoring account balances more frequently.
Whether for your kids, grandchildren, nieces, nephews, or young friends, use these ideas to get the children in your life interested in financial literacy.
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