Kids & Money
GUEST EDITORIAL: Make Learning to Save Fun and Easy for Kids this America Saves Week.
When it comes to learning something new, you often hear, “it’s never too late.” But when it comes to smart money habits, it’s almost never too early.
Beginning February 22 through February 26, it’s America Saves Week, an annual celebration that encourages us all to commit to saving successfully by setting goals and making plans. Each day focuses on a different savings theme as participants explore various areas of their finances. As an advocate for K-12 financial literacy education, I find Friday’s theme most notable: Saving as a family.
All parents want their kids to grow to be financially independent and able to afford the important things in life without incurring lingering debt. You can set your child on the right path by teaching and modeling important financial habits, especially saving.
The key is starting early. If your child is old enough to use their imagination to play make believe, you can begin teaching saving skills. Research shows that kids as young as three can already understand value and exchange, and further research by the University of Cambridge has revealed that children as young as seven can learn the basics of finance.
But regardless of your child’s age, it’s never too late to teach smart saving choices. Learning to save brings kids a sense of accomplishment and an understanding of the costs associated with things they want – and need.
The key to being a good saver is becoming comfortable with delaying gratification. Teaching small children delayed gratification will help them resist the urge to make impulse purchases in the future. It’s as simple as withholding a sweet treat until later, having your child wait to enjoy screen time until after the family has eaten and cleaned up together, or resisting the urge to buy the toy your child is begging for. Delaying gratification lets your child learn the joy of “waiting for it.”
Earn and Save
When he is a little older, your child can “earn” checkmarks or stickers on a toy chart by helping to clean up toys, being cooperative, or going to bed without a fuss. When he’s earned enough stickers, he can pick out a small toy at the store. He’ll learn the first step in “earning” what he wants and saving up for it.
Children love to pretend to have grown-up jobs. After all, playing pretend fireman or chef is fun! Extend the pretend play by talking to your child about getting paid for a job. Pay pretend money and explain how a worker might spend his money. In addition to pretending to put some money in savings, begin talking about budgeting, too. Divide “earnings” between money used for what he will “need” to pay for – food, housing, a trip to the doctor – and what he “wants” to pay for – a toy or a book.
Once your child is old enough to be given money as allowance or for completing small chores, she can learn the difference between having money for now and for the future. Clear “piggy banks” are ideal to allow children to see their savings. Find pictures of an item your child would like to save for. Count the savings often and tell your child what could be purchased with the money she has, as well as how much more she will need to save in order to buy the goal item. Borrow money from your child when you’re low on cash and pay interest when you give the money back. Explain that this is the way real banks work.
As your child grows, teach her to divide her money into categories. While she will probably want to spend some of her money, the rest can be divided between short-term savings for a special item and long-term savings that will be important to her future, such as saving for college.
If you have a 529 college savings account, like Future Scholar, explain that money that goes into that account can’t be touched. Discuss how compound interest works and talk over ways your child can add to college savings by contributing money earned to help reach your 529 savings goals. Give your child a sense of ownership in his future.
Above all, don’t be reluctant to talk over saving and finances with your child. Studies show that children whose parents actively teach financial skills grow up to be more financially prepared. So, wring as many important savings lessons as you can from everyday life – and make it fun!