Teaching Children to Save


It’s never too early to start teaching children the importance of saving money. From a young age, children are presented with numerous opportunities to spend, whether it be influences such as television commercials or shopping with their parents, spending practices are often much more visible than saving routines. This is why I recommend parents start teaching their children saving habits as soon as possible, starting simple and then building on their knowledge as they get older. Here are five ways parents can start teaching children about money and begin them on the path to a positive financial future.  
 
  1. Lead by example – Children learn by watching others. Talk to your children about spending and saving and then put those habits into action. For example, turn grocery shopping into a learning opportunity. Make a list and a budget for your shopping order, discuss with your children why you’re buying certain products and the differences in prices. If an item is on sale, explain how that will save you money. Let them see you pay for your order and talk about your payment method. Turning everyday activities into learning opportunities will not only teach children about saving money but also about the value of a dollar and the cost of necessities.
  2. Start simple & set a goal – As soon as your child starts receiving money, perhaps a gift from a relative for a birthday, put that money in a piggy bank. Encourage children to fill up the piggy bank. It’s a fun way for young children to start saving and you’ve just created their first financial goal. They may wish to set another savings goal, perhaps for a special purchase. One way to encourage a child to save and help them reach their goal is to offer to match their savings.
  3. Explain needs vs. wants – Making the distinction between needs and wants directly relates to saving and budgeting. It’s also a topic that many of us still deal with as adults. Explain to children how you must use your money to first pay for basic needs, and then, if there’s money left over, additional items. If your child has saved up for a special purchase, ask them to think about the impact of their spending and the item they have chosen. How long will the item last? Will they be happy with their choice, a day, a week, a month later? Discussing these questions before they spend their money will help them decide if they really want to make the purchase or if they’d rather continue to save.
  4. Youth accounts – There will likely come a time when your child has quite a bit of cash in that piggy bank and when that happens, I recommend setting up a youth bank account. Like all my advice when it comes to saving, starting earlier is better when it comes to visiting the bank for the first time. Each time I meet with a member who is setting up a myChequing Youth account, I discuss the features and suggestions on how best to manage it. Our youth account is free for children under 18 years of age and I recommend a parent be on file for anyone under the age of 13.
  5. Debit cards – When a youth account is opened, parents may also choose to get their child a debit card.  I don’t have a particular age that I recommend this, it really depends on the child’s level of understanding when it comes to saving and spending. When a young child does get their first debit card, I recommend setting a low daily limit and then the parents can manage this amount as they see fit. I also take the opportunity to talk about the importance of keeping a personal access code (or PIN) private and I take the family to the ATM to ensure the child is comfortable with the process. Our myChequing Youth account offers 30 free debit transactions and parents also have the option of setting up online banking for their children so they can easily and conveniently keep track of their money.
Understanding money matters is an important life lesson that parents can incorporate into everyday life. Starting young will help provide the next generation with the tools they need to have successful financial futures. If you’d like to discuss youth banking with a member of the CUA team, please contact us at 902.492.6500 or info@cua.com.

Cathy

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