by Emily Hechler 
For most kids, saving money is an unknown concept. Unless you take your kids to the credit union with you to deposit money, they are probably unaware of the conscious effort you put in to save money for your family’s future.
While ignorance is bliss, being uninformed about the importance of saving money can be dangerous as kids get older. How do you teach kids how to save money? After all, when you’re a kid, there’s so much stuff to buy! Check out these tips on developing healthy money habits for your kids and saving toward future goals.
When to Save Money
When your kids are really young, they’ll have no concept of money or how the economy works. They just know that you go to the store or order what you want from Amazon to be sent to your house and voila! You own it! When kids are this little, it’s a good idea to save all of their money for them. They won’t remember that you took the $50 out of a birthday card and deposited it in an account at the credit union when they were two. Depending on your financial situation, you can use your kid’s money that you’ve saved for them to purchase new toys or clothes in the future for them.
As kids get older and start to understand money, it’s a great idea to give them some controlled independence with their money. You can still save the majority of their money but offer them small amounts, like $5 here and there, when you’re out running errands, to let them choose a treat. If they ask to buy something while shopping, remind them that they’re using their own money, helping them learn the value of their purchases and decision-making.
As a parent, you can help guide your kids with how they should manage their money. In light of their savings goals that they have when they are preteens, you may have a rule where they can only spend up to a certain dollar amount each month. You know your kids and their spending and saving habits best. Work with them to create meaningful and celebratory goals so you both feel at peace with their money management.
Healthy Money-Savings Habits for Kids
The money habits we teach to our kids when they are young can influence their decision making for years to come. Think about your own financial habits. The more you do them, the easier they are to do. This is great if you practice healthy financial habits but can be dangerous if you don’t cultivate good money habits. The same is true for your kids. Instead of having to try to teach good financial practices to your kids after years of uninformed or costly decision-making, start now! Here are five healthy money habits that you can practice with your kids.
Give an allowance. By giving kids an allowance, this introduces them to the concept of working for your money in a safe environment. Unfortunately, we aren’t just handed money as adults. We have to work hard for it. Giving your children an allowance in exchange for completing simple chores such as folding the laundry and pulling weeds is a kid-friendly way of developing hard workers. If they don’t complete their chores, they don’t get the allowance.
Set goals. As a parent, it can be hard finding the balance of buying your kids a toy or a treat just because they ask. Every family will navigate this differently, and that’s ok. What works best for your family might not work best for another family. When your kids start earning their allowance, help them set savings goals so they can use their own money on a fun purchase. Kids are visual learners, so creating a savings goal chart can help them visualize how much money they have and how much money they still need to earn before they can go shopping for their new toy.
Open a savings account. Alltru’s CUbby Youth Savings account is just for kids ages 12 and under. Bringing your kids to the credit union to open an account can open their eyes to the exciting world of finance. When kids make a deposit of over $10 into their CUbby Youth Savings account, they get a special prize! Plus, they get a treat for their birthday too. Our higher-than-average interest rates will help their account balances grow over time, just like in their parent’s account.
Avoid impulse shopping. Last time you went shopping, how many additional items did you bring home that you didn’t intend on buying? Impulsive shopping can cause you to spend money on things you don’t need or even regret buying a few days later. Kids model what they see. If they see you make impulsive purchases, they will too, even if they don’t understand the idea. When you take your kids shopping with you and are tempted to impulsively buy something, don’t do it. Tell them that you want to buy the item but will come back next week if you still want it. This can help teach kids patience and can help you both save for a more expensive purchase later.
Cultivate giving. Many find joy in giving their time and resources to help others. Suggest to your kids that they give to a local non-profit of their choosing. Or they can save some of their money to purchase birthday or holiday gifts for family and friends. While their contribution may be small, it will be appreciated by whoever receives from their acts of kindness.
Long-Term Savings Goals for Kids
Out of those five healthy financial habits, the hardest thing to practice is saving money. Spending money is so easy. As long as your kids receive the correct change back from the cashier, spending money is fun! On the other hand, saving is more difficult. How much do you let your kids spend versus save? Here are some long-term savings goals for kids that can help you find that balance.
Save for expensive toy purchases. Looking back at my childhood, I was probably not as grateful as I should have been. No matter what our age, we tend to value something more that we worked hard for and had to save for over time. That item is more valuable because of the time and effort it took for us to finally have it. We probably take better care of it too because we had to patiently work and wait until we could afford it. For kids, this purchase could be an expensive toy. Make it a savings goal that your child saves for over a few months.
Save for a fun experience. All-day outings with kids can quickly get expensive, especially if you have several kids. While all parents want to be able to treat their kids to a day at Six Flags or Sky Zone Trampoline Park, those experiences only last for a short time and can be expensive. Create savings goals with your kids for a day, or even a season pass, for a fun family experience.
Save for a smartphone. According to the Child Mind Institute, 42% of kids have a phone by age 10. By age 12, 71% of kids have a cellphone. Many parents give their kids cellphones for safety reasons, but kids can do so much more than just text mom when they arrive at school. If your child wants the other advantages of having a phone, have them save their money to offset your costs. This could be by having your child pay for part of the purchase or having them pay a small amount of their monthly phone bill.
Save for a first car. As your child gets older, they’ll soon get their driver’s permit and then driver’s license. Driving a car is a large responsibility for teens, partially because owning a car can be expensive. Encourage your teen to start saving to help purchase a car. Whether you encourage them to purchase the car entirely or just cover the down payment depends on your family and financial situation. Communicating these expectations or goals months ahead of time can help teach the importance of long-term saving.
Save for college. The cost of attending college continues to increase year after year. By having your kids and teen start saving a few years in advance, they can have enough saved to pay for a semester or two by the time they graduate high school. Tuition isn’t the only thing that costs money. Parking, books, laptops, and other fees add up too. The more they can save in advance, the less of a financial burden college will be in the future. If college isn’t in your teen’s future plans, saving the same amount of money for a more reliable car or moving out are impactful too.
Conclusion
Saving money as kid can be challenging, but it doesn’t have to be. When the teacher has the right habits in place, it’s easier for kids to adapt to their money saving lifestyle too. It’s important to communicate your efforts too to remove any expectations your kids may have about saving and spending money. Encouraging these healthy financial habits in your kids is a great way to introduce managing money responsibly as a kid. By creating long-term goals together, you can help your child anticipate exciting purchases in a few weeks, months, or years down the road.
Great financial management can become better with the right partner by your side. By being a member at Alltru, you can access the products you and your child need to create a financially stable future.
