Fifteen years ago, the American Bankers Association (ABA) began designating one day each April to be Teach Children to Save Day. Since then, over 4 million young people have been taught the importance of savings from some 97,000 banker volunteers.
The U.S. Senate got on board with the initiative to teach Americans how to establish and maintain healthy financial habits by passing a 2004 resolution that designates April as Financial Literacy Month.
Have you joined in on the effort to teach your kids to save?
Give them money. You should, of course, require they do something to merit the money, such as chores, but children need to handle real money to truly learn how to manage it. Pay a regular allowance, then help them separate the money into spending and savings jars if they’re young. As they get older, your children will be impressed when you bring them into a bank to have them open and make deposits into their own savings accounts. Consider helping them open a Bank of American Fork KidSmart Savings account. Teach them the value of interest and how a bank can help their money grow. It will be exciting for your children to see this principle in action when they receive their quarterly savings statements and observe how their savings have increased.
Explain needs vs. wants. Help them see the difference between needs and wants. Identify and prioritize specific needs and wants for your children. Have children set short- and long-term goals based on the needs and wants they’ve identified. Create a savings plan for how to accomplish those goals.
Encourage entrepreneurism. In addition to household chores, what are other ways your child can earn money? Help them set up a lemonade stand or make a flyer for lawn-mowing services. Teach them how investing in their business (advertising with signs, purchasing lemonade ingredients, etc.) can help increase sales, resulting in greater earnings. Consider incentivizing your kids by matching any money they earn or save.
Teach smart shopping. Look at ads in print circulars or on different websites to compare prices. Have your child help you cut coupons and then find the discounted items at the store. Teach your child to look for sales before making a purchase. Explain that when you pay for purchases with a debit card or credit card, you must have money to pay for those purchases.
Let them make decisions. Allow your children make decisions on how to spend their money (after savings). While you can make suggestions, the final decision should be left up to the child. They will learn firsthand from their mistakes and better understand how to make wise spending decisions in the future.
Set a good example. The adage “Do what I say, not what I do” doesn’t work here. If you want your children to be good savers, you must be a good saver, too. Talk to them about how saving money has helped you, and let them see you being responsible with your money, including depositing money at the bank, paying bills and shopping on a budget. Help them study financial basics.
Learning to manage money is one of the most important skills a child can learn, yet one of the most overlooked. Teach your children to be financially literate this April and throughout their childhood, and you will be giving them a gift that will benefit them throughout their entire life.
How have you joined in on the effort to teach your kids to save?