Here’s the thing you never think of when you become a parent… Literally, everything your child needs to know to become a valuable part of society, is taught by you, the parent. Things like tying shoes, how to make toast, how to read, how to use the bathroom, how to express emotions, and how to make a money smart kid.
Being a parent is teaching and coaching 100% of the time. You are always on the clock and on the record and if you miss something, it could end up hurting them in the long run. I mean, no pressure right…?
My Personal Experience With Learning Financial Responsibility
One thing that is commonly pushed to the back-burner while we are busy teaching our children the importance of hand-washing, is the importance of money management. There are a lot of parents who never learn the proper way to teach a money smart kid.
For me personally, it was never a topic of discussion while I was growing up. I remember the father of one of my high school boyfriends trying to tell me about 401Ks and retirement savings when I started my first job, but I didn’t listen. Since then, I’ve muddled through every financial decision in my life, attempting to use the internet and intuition.
The Path to Financial Responsibility
As an adult, I’ve come to realize the importance of financial responsibility and want to make sure that it’s a topic of conversation in my household. Two of my children are only 7 and 2 years old and I’ve already started to talk about and expose them to money. They both receive money for birthdays and holidays which they’re always eager to spend. Since neither of them has much of a concept of how to spend or save just yet, we are starting with the basics.
Step 1: Open a Youth Savings Account
The first step in setting up your child for financial success is getting them a savings account at the credit union. This may sound complicated, but it’s actually a lot easier than it seems (trust me, I don’t do complicated with three kids).
At Alltru Credit Union, we offer the CUbby Kids saving account, which only requires your child’s birthday, full name, and social security number to open. I know it seems like a hassle to gather all of this info, but I promise you it’s worth the effort!
One benefit of this account, in particular, is that it earns 5.01% APY* in interest. This makes it easy to explain to young children that if they put the money in their special account, it is safe from bad guys or greedy siblings AND it gets bigger the longer it sits in there!
Then one day, when the time is right, they can buy more toys than they could today. If they’re able to grasp that concept, you can then show them the line item in statements where it shows how much the credit union has paid them.
Step 2: Set Savings Goals
One thing that we’ve started to do with our kids is teaching them how to set savings goals. So for example, if my son wants to buy something, we talk about how much it costs, how much he expects to make at his next birthday or holiday, how much he might earn in interest, and how long it will be before he can afford the purchase.
When it comes to making a money smart kid, they usually only want to purchase simple things that will bring them joy in the moment such as toys or candy. The idea is to start getting them to see the bigger picture and be ok with patiently saving for bigger, more valuable things down the road. Parenting isn’t easy. Every day is about making little gains. The thing to keep in mind is that teaching your kids about money doesn’t have to be a chore. You can find ways to make it a fun and rewarding experience for both you and your child.
We all want our children to grow up into responsible adults and adding money management to the list of things they need to know before we release them out into the world could make all the difference.
Live long and prosper,
*APY=Annual Percentage Yield. Rates are subject to change.