Monday, May 25, 2020
Knowing how to save money is an essential for building wealth and having a strong financial foundation in our adult life, yet budgeting and other money management skills are briefly or rarely taught in schools. Many of us have learned these skills through experience or by trial and error. As a parent, you have the opportunity to share these important skills and lessons with your kids.
Here are ways you can show your kids how to start saving now to help ensure a healthy financial future later.
Start with a piggy bank
One of the simplest ways to start teaching your children the importance of saving is the good old-fashioned piggy bank. Challenge your kids to fill up their piggy bank until it is full. Educate them that the piggy bank is for saving money for the future. MSB sells a variety of banks at its McHenry location.
Utilize savings jars
Instead of giving your kids a new toy or piece of sporting equipment, have them save their own money for it by creating shores or setting aside a certain percentage of “gift” money. Create a jar for each item and encourage them to save a small amount of money per week. You can help them by giving them their allowance in one-dollar bills so they choose to which jar to contribute. For added motivation, have them put a photo of the item on the jar so they have a visual reminder of the short-term goal they’re working toward.
Open a checking or saving account
For children under the age of 16, a savings account is a good first option. When the piggy bank is full, open a bank account for your kids. Involve them in the process by having them count the money being deposited so they have an understanding of how much money they have saved so far. Show them the monthly statements so they will learn that the more they save, the more their money will grow.
For teenagers over the age of 16, MSB the Essential Student Checking which also could include a debit card to teach older children how to manage their money via electronic transactions. At this age, teens are working, driving, running errands for parents, etc. and will need a greater understanding of how to use money and banking tools. Use of MSB’s mobile app is a great way for parents and their teens to monitor spending and discuss habits.
Both accounts must be opened by a parent or guardian and require a nominal deposit to open the account for a minor. With no monthly balance minimum or transaction fees, parents and guardians are able to seamlessly transfer money between their and their child’s accounts. Each account also comes with parental control options including setting spending limitations and the ability to lock down an account if needed via SecurLOCK.
Create a timeline
The idea of time and money can be hard for kids to understand, especially younger ones. In addition, financial lessons and education should be ongoing and timely. Creating a timeline can help visualize their savings goal, show them how their money is growing, and keep them engaged in the process. For example, your child receives a ten dollar per week allowance and wants to save $100. If they saved all their allowance, they’d reach their goal in about three months. Using a long piece of paper and a pen or marker, write $0 on one end and $100 (or desired goal) on the other end. Add checkpoints at 25%, 50%, and 75% of their goal. Reward your kids when they reach each checkpoint to encourage them to keep saving.
Lead by example
The best way to teach your kids about saving money is to show your kids that you are saving money. Have a savings jar for a desired goal or item next to theirs and contribute to it regularly. While shopping, show your kids how to comparison shop and why purchasing one item makes more financial sense than another item. Educate them on the importance of saving a portion of each paycheck and using employee 401K or investment plans to prepare for their financial future. Show your kids that you are preparing and saving for their college education. . If you haven’t opened a college savings account, McHenry Savings Bank’s offers College Planning through its partner at Investment Services.
Talk to your kids
The topic of money and finances shouldn’t be scary. Starting conversations about money and the importance of saving are teaching your children lessons for now and the future. Ask them about their short-and long-term savings goals. Help them come up with creative ways to earn and save money. By letting them know you’re open to conversations about finances, you’ll encourage them to ask questions on their own and keep learning. It’s truly an investment in your children’s future.
At MSB, we work hard to earn your trust by seeking to understand your financial needs and goals. We can then provide investment and banking solutions designed to meet your needs - including checking and savings accounts for your children. Visit McHenry Savings Bank to learn how you can save or speak with an expert to discuss your personal financial goals by calling 815-385-3000. Member FDIC.