A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old. Which means teaching them the value of money as well as healthy habits around it has to start young. You still let kids be kids while instilling those healthy habits in fun and engaging ways. Here are some tips for setting your youngins up for a bright financial future.
Start the Conversation
Don’t be afraid to talk to your young kids about money! Many parents feel that a conversation about finances with their children is taking away from their childhood. But instead it’s setting them up for their future. There is no need to stress them out about money, but start creating an open conversation about it even before they can fully grasp the concept. Even schedule a weekly/ monthly check in so you can introduce them to new ideas while they mature.
Define Wants vs Needs
Make sure your little one can distinguish between “wants” and “needs.” Teach them that a need refers to items like food, shelter, and clothing. Whereas a want might be a video game or a toy, anything extra that doesn’t qualify as a need. This plants the idea young that, while it’s ok to spend money on things you want, needs come first when budgeting.
Give Them an Allowance
No matter how small their allowance, giving kids a little change on a weekly basis for doing chores around the house will not only start to teach them work ethic, it will introduce them to the idea of saving money from a young age. Create a list of chores and a monetary value that goes along with completing said chores. It will also save you some work around the house!
Have Them Save for What They Want
Once you’ve distinguished needs from wants with your child, teach them to save up to purchase their wants using the allowance they earn. This will not only teach them to budget, it will probably increase their appreciation for what they have and create a sense that they earned that want.
Offer Savings Incentives
It will motivate your children even more if you offer to help them along their savings journey. Match the money they save weekly or even give them an extra $1 for every $5 they save. It's like a 401k for kids! This might even make the idea of employer contribution to retirement accounts, or a company matching a percentage of the employee’s contribution, easier to grasp once they are out in the professional world.
Give Them a Place to Save
Piggy banks are a traditional way to teach young ones to put money away. But why not go one step passed that adorable pig and open a savings account with a financial institution to make it more official and reiterate the importance of saving? Take them to the bank with you to help them open an account!
Junior Savings from Citizens Bank
Our Junior Savers accounts are designed to teach children at a very early age the importance of building a strong financial background. Whether they are saving for a new bike —or college— Citizens Bank makes it easy to help achieve your financial goals.
Contact us now to open an account and start teaching your kids to save money.