Kids who talk with their parents about money are more likely to continue good financial habits throughout adulthood. Get the conversation started with these helpful tips on how to raise a money-smart kid.
Want vs. Need
Ask your child if he knows the difference between a want and a need. Do you need that video game or do you want it? Do you need that toy or do you want it? Before your child is about to purchase something, ask them if they really need that item. Helping your kids to identify the difference between a want and a need will set the foundation in learning how to budget, save and buy the correct way.
An allowance gives your child the opportunity to manage their own money. Decide what amount is appropriate based on your child’s age and capabilities. No matter the amount, an allowance is a great way to teach budgeting. Set a savings goal to put a certain amount, like 10% or 20%, into a savings account. Then set spending goals for the rest. Have your child think about his purchases beforehand instead of making impulse buys.
According to the American Bankers Association, children with as little as $500 in college savings are three times more likely to enroll in college and four times more likely to graduate than those without college savings. Talk to your kids about saving for college. Set a yearly goal for them, a certain amount to save each year for their college fund. This will encourage them to continue their education after high school.
Open a Youth Savings Account
One of the best tools in teaching your kid how to save money is by opening a youth savings account. According to a study by the University of Kansas, children who have early access to savings accounts accumulate more assets and are four times more likely to invest in stocks as adults. Becoming familiar with saving at an early age sets the tone for your child’s financial future by creating good financial habits.
A savings account allows your child’s money to earn interest. Your child will see that putting his money in a savings account will earn more money over time rather than having it sit in a piggy bank or drawer at home. Help your child develop smart saving skills by opening a Lil’ Partners or Teen Partners account. If you open a new youth account by June 30, 2020, you’ll be entered for a chance to win $500! Plus, we’ll even make the first $10 deposit. Visit our website for more details.
It's never too early to start preparing your child for his financial future. The saving habits he starts now will follow him throughout his life.