April is Credit Union Youth Month
It probably goes without saying, but we here at Member One are pretty keen on savings—a healthy nest egg, an emergency fund, IRAs… you get the point. We believe the best way to become a savings guru is to start from a young age, so how do we get our kids to put that money in a piggy bank instead of spending it frivolously? Here are a few ways to get your kids aboard that savings train.
Start Early. Once children start saying, “I want,” it’s a good time to start teaching savings. While they won’t understand compound interest or annual percentage yield, you can explain how we sometimes have to wait for the things we want. Delayed gratification is an important lesson to learn.
Give commissions, not allowances. There is nothing wrong with giving your child money each week, but it should be earned. Have them perform chores like mowing the lawn, taking out trash, or doing dishes. This will teach them the value of work and prepare them for when they grow and get a job outside of the home.
Make it visual. For younger children, give them clear jars to keep their money in so they can see their progress. For older children, it’s wise to open a savings account with a local credit union. You can then set up online banking and help them monitor their progress online.
Set savings goals. It’s much easier to put away money when you know what you’re saving for. If your child wants a game or pair of shoes, show them how much it costs and how long it will take before they can buy this item. You can also show them ways to reach their goal faster by doing additional work.
Explain responsible credit card use. Obviously, this is reserved for teenagers. Explain interest, you know, HOW credit card companies make their money, and warn them that they should only get a credit card if they can afford to pay off the balance each month. It’s also important to explain what credit is and how this can affect them significantly in the future when they want to buy a car or even a home.
Financial responsibility begins at a young age. It won’t always be easy to watch your children struggle and possibly fail, but it’s important that they learn these lessons early in life instead of later. To get started today, stop by your local credit union (Member One, for example!) to open up a youth savings account and set your children up for fiscal success.