When it comes to your children, you want only the best for their future. While talking about money with your children may seem premature, doing so in an age-appropriate manner can be useful and educational. Money management skills are best learned young so one can make better financial choices as they get older.
Preparing for adulthood is never easy, and it’s even less easy if you go into adulthood not knowing anything about money. Instead of worrying about your child growing up with financial trouble, teaching them young about the basics, and getting them started with a personal savings account, is a great way to alleviate that stress.
Here are a few age-appropriate ways you can teach your child about the value of money, and tips on starting their first savings account:
Use your own savings account to educate your child.
Your child likely doesn’t know how savings accounts work, or how one can build their savings without a huge effort. Show them how you can set up auto-transfers from checking to savings, so in the future when they are earning their first paycheck, it’s a natural first move. You can also show them how savings can build interest over time.
Understand that modern technology has changed the financial landscape.
Before you start talking to your child about money, remember they live in a different world than the one you were raised in. Because of mobile banking and online bill pay, they may know nothing about writing checks or receiving paper bills in the mail. Shopping online has replaced a significant part of the in-person shopping experience, and as a result, the simplicity of online shopping can affect how a young mind views saving money in a personal savings account. Because so much of the financial world has moved to a digital experience, your child will learn about money in a different way, so adjust your teachable moments accordingly.
Give them an allowance to teach them about budgeting and saving.
In exchange for tasks or chores at home, give your child a fixed allowance and schedule a time to pay them. Treating an allowance like a paycheck by maintaining the amount and the pay schedule is a great way to introduce your child to the working world, all in the safe confines of home. Use this time to talk to your child about using their savings account for the money they earn, and also about the desire to set some of it aside to spend.