It’s like training wheels but with cash.
It’s never too early to start saving for the future, and there are a number of ways to pass along good savings habits to the next generation.
Talk openly about money with your kids
Communicate your values and experiences with money. Encourage them to ask you questions, and be prepared to answer them — even the tough ones.
Lead by example
Children tend to emulate their parents’ financial habits. Be an example of a responsible money manager by paying bills on time, being a conscious spender and an active saver.
Help your kids understand the principle of earning money
If your kids can learn to appreciate what it takes to earn money, it will help instill a sense of the value of a dollar. As a starting point, consider assigning chores and giving your children an allowance for completing their tasks. Eleanor Saves the Day, Bank Iowa’s children’s book, helps children learn the importance of good savings habits. Click here to learn more.
Teach kids to save
Require them to save at least a small portion of their allowance each week. The three jars method, one for spending, one for saving and one for charitable contributions, is a good way to impart a sense of responsibility. Consider opening a savings account for your child so they can make regular deposits and watch their money grow each month.
Encourage wise spending
Explain the difference between needs and wants, the value in saving and budgeting and the consequences of not doing so. Discuss the importance of saving to reach a specific financial goal. Help them determine what things they might want to buy and how much they should set aside each week to meet their goal. Children tend to save money best when they have a specific goal in mind.
By talking with your children about the importance of saving, instilling a sense of the value of a dollar, helping them set financial goals and regularly going with them to make deposits into their savings account, you can help them develop good saving habits.
For more information and tips, visit the ABA’s Teach Children to Save website.