By now, the school year is in full swing, and your little star pupil is (hopefully) hitting those books hard, studying math, language arts, social studies, and all the rest. There’s one crucial subject, though, that may very well be missing from your child’s school curriculum: financial education. While it may sometimes be easy to lose sight of financial education in between French class and football tryouts, the fact is that budgeting, saving, and yes, even a bit of investing are real life lessons that will pay off for your youngster throughout life.
Meaningful financial education can begin earlier than you might think. According to the Consumer Financial Protection Bureau, kids are “developmentally capable” of understanding savings as a concept by the age of five. What that means in practice? As soon as your little one is old enough to start saying (and saying, and saying) “I want,” he or she is old enough to start the saving habit. Here are 5 ways you can help your child to make the grade in personal finance – now and well into the future.
Teach Life Skills by Emphasizing Entrepreneurship
Sure, an allowance for chores is a fine start, but if you want your kids to practice creativity, problem-solving and a go-getter attitude – all while learning to take control of their own finances –the best thing you can do is to promote entrepreneurship at an early age. Of course there’s the classic lemonade stand, and there are also numerous other business paths for your young entrepreneur to blaze, depending on their interests, talents, and age group. Artistically inclined kids might want to sell handmade jewelry or screenprinted t-shirts, while animal lovers might start petsitting or dogwalking for the neighbors. High school students who excel in a particular subject can offer tutoring services to younger kids. Tech and media-savvy youngsters can try monetizing a blog or podcast (with parental permission and supervision, of course.)
Starting a small business teaches your child to think outside of the 9-5 box when it comes to making a living, a message that has become ever more important in an unpredictable economy. It’s also a fun experience to share, and who knows, your student may end up developing a skill, a passion, or even a business idea that turns into an adult career.
Start the Saving Habit ASAP
For very small children, it could be as simple as filling up glass jars with change and then counting up those savings once the jar is full – anything that allows them to track progress visually. Once your child is old enough to start saving up somewhat bigger sums of money, it’s time to open a savings account. Skip those online banking options in favor of a local credit union where your child can make real, physical trips to deposit their savings. The sight of the drawers, the sounds of the counting machines, the smell of cold hard cash– these sensory experiences make the idea of money and banking less abstract to younger kids. Plus, in-person banking gives kids the opportunity to speak for themselves and ask banking professionals any questions they might have.
Treat Banking as a Learning Opportunity with Youth-Oriented Accounts
But don’t settle for any basic, boring old “adult” banking. Look instead for specifically youth-oriented accounts. The benefits of youth accounts are several. First, they often include additional age-appropriate learning resources, such as games, articles, and even workshops. (You as the parent are your child’s most important teacher of financial literacy, but that definitely doesn’t mean you have to do it alone.) Second, some credit union youth savings clubs provide higher compounding interest rates as compared to “regular” savings accounts. Why would they want to do this, you might ask? Because credit unions are all about promoting financial literacy within the communities they serve, and what better way to achieve this than by teaching its youngest members to start saving at an early age?