Tips for teaching kids the importance of saving money | Q&As
Teaching your children to save their money and not spend it right away can help them learn lifelong skills in how to manage money. For most kids, the obvious thing to do when they have a little money is to spend it. We spoke to Wells Fargo South Carolina Region Bank President Justin Hawkins about teaching kids the importance of saving.
Why is it important to teach kids about saving their money?
By teaching savings lessons at every stage of a child’s life, it can instill good financial habits that can last a lifetime. In their daily lives, our children see numerous messages and advertisements pushing them to spend, spend, spend. Without a basic financial education, young adults and kids can become overwhelmed and not make the best financial decisions for their futures.
Helping kids understand the concept, value and importance of money management can instill healthy personal financial success. Money management and education is important. To help parents, we put together a set of tips on ‘Raising Smart Savers,’ as well as the online financial education resource ‘Hands on Banking.’
Do you suggest they open an account at a bank or just save in a jar?
It’s important to provide support and guidance to young children and teens to help them learn how to manage money at an early age.
At an early age, helping them to open a joint kids savings account is a good way to start your children on the road to financial success. This option gives your child the ability to start saving their money, and the ability to use the savings account while you monitor account activity. In their teen years, helping them open their first bank account can be a great building block for young people to learn how to manage money on their own.
Our Clear Access Banking℠ account is an easy-to-understand, transparent and convenient banking account that helps customers, such as teens, avoid spending more than the amount available in the account without incurring overdraft fees or non-sufficient funds fees.
With a waived monthly service fee for primary account owners ages 13 to 24 years old, it’s an ideal first account that includes many convenient banking services at no additional cost, including access to the Wells Fargo Mobile® app and Wells Fargo Online® banking tools, banking support offered through our branches and 24-hour Phone Bank and access to Zelle®, which allows customers to send and receive money with friends and family. For more information on Clear Access Banking visit www.wellsfargo.com/clearaccess.
How does saving money as a kid translate to saving as an adult?
When a parent or guardian helps educate children about money management and develop a healthy relationship with money, it can have a positive, lifelong impact on their future financial success. When you start saving money at a young age, you develop a healthy habit that can make it easier to save as an adult – it becomes part of your routine.
It’s a good idea for parents and guardians to have regular conversations about money with their kids, and there are numerous resources and tools to help. Check out the ‘Hands On Banking’ activities for families that review the basics of money management as well as ‘Providing virtual financial education for families and educators’ on Wells Fargo Stories.
What should you teach your children to save for? Just necessities? What are some more age appropriate tips for saving money (young vs. teens)?
Again, regular conversations with your children about saving and managing money are important. We provide a framework to shape conversations with kids at every age in our article “Raising Smart Savers.” In addition, Hands on Banking provides the following tips for helping tweens with daily financial decisions and saving:
- Have the kids accompany you on shopping trips and help you to clip coupons, watch for sales, and compare quality, service, and price.
- Preparing a meal together can be an opportunity to discuss the value of planning ahead and avoiding waste — concepts that also apply to money.
- Before making a major purchase, discuss the pros and cons with the family. Talking about money in this way will help your kids to recognize the importance of weighing alternatives.
- If your child asks for expensive items the family can’t afford, don’t give in; stick to your family budget. Use the situation as a teaching opportunity by giving your child the specific reasons behind your decision.
- When they’re old enough, let kids sit with you while you pay some household bills, balance your checking account, review your monthly credit card statement, or update the family budget. Give them a sense of how much it costs to cover the various monthly household expenses.
- Explain your money management strategies and decisions to your children, whether it’s saving for a family vacation or using your home equity as collateral for a loan to remodel the kitchen.
Tips for younger teens:
- Help younger teens learn and develop money management skills by sharing your past money mistakes and what you learned from them.
- Let them know that they can always turn to you for financial information and advice.
- Help open their first bank account.
Tips for older teens:
- Having a part-time job can be a good way for young people to learn more about earning money and how to manage it.
- Providing an allowance – provides an opportunity to learn and practice money management skills.
At what age should kids start learning about financial responsibility?
As soon as your children can count, you can introduce them to money – dollars and cents. It’s never too early to start. In fact, that’s what I did with my three children. By teaching your child to understand the concept of money and how it relates to their everyday things, like toys and food, you can help them better understand the value of money. Here are a few tips for talking about money and financial responsibility:
- Make it a (daily) conversation
- Start young
- Discuss fundamentals
- Let kids make decisions
Of course teaching kids about the importance of savings is only one piece of financial literacy. Check out these tips for teaching kids about credit including how to explain what it is and why it’s important.
