Money management is a complicated subject that even adults have trouble mastering. It’s understandable that teaching your kids about money might not be your favorite parental to-do.
Here are a few easy steps to start teaching your children about finances.
1. Start By Setting Up An Account for Your Child
Call your financial institution to speak with an account specialist, who will walk you and your child through the process of opening a certificate of deposit or other savings account.
Knowing his or her name is on the account will provide your child with a sense of ownership over the money and incentivize them to make regular deposits.
“Explain how compounding interest works, what an annual percentage yield for savings is and how to compare APYs for different savings accounts,” advises Rebecca Lake on The Balance.
A joint savings account provides a safe training ground for your child to learn about finances. The fundamental lessons they learn about saving with you will serve them well when it’s time for their own account, according to NerdWallet writer Tony Armstrong.
2. Make Saving Money a Habit
Telling your child to save money is too general of a statement. You need to help them implement a savings practice.
If they receive money for a birthday or holiday or earn an allowance from doing chores around the house or money from a part-time job, encourage them to put a portion of the cash in a savings account. This regular practice will help their bottom line grow and establish good money habits.
Related: When should you set up your child’s savings account?
3. Give Your Child Saving Goals
Saving for the sake of saving won’t excite your child about managing money.
Working toward the purchase of a new toy, game or activity, though, will make them feel that the savings efforts are worth it and teach them a valuable life lesson — good things come to those who wait (and work hard).
“If they know what it is they want to save for, help them break down their goals into manageable bites,” Lake writes on Investopedia. “For example, if they want to buy a $50 video game and they get a $10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate.”
4. Keep Saving Top-of-Mind at Home
Just as your child grows, their comprehension about money will, too. Keep the money lessons ongoing, altering them to align with your child’s age, ability and interests, Lake advises on The Balance.
By establishing open communication about money, saving and investing (when the time is right) with your child, you’ll help him master future financial independence.
5. Set a Good Financial Example
You are your child’s first and constant teacher — and there’s no better way to teach them than by setting a financially sound example.
“Getting your emergency fund in shape, opening a 529 savings account or simply increasing your 401(k) plan contributions are all steps that you can take to encourage saving as a family activity,” writes Lake on Investopedia.
Start the money conversation early and keep it consistent to help your child learn to be a saver and a lifelong money-management master.
Open a Minster Bank Savings Account Today
Open up a new savings account or CD today to start teaching your kids about good financial habits. The best news? You can do it all right from home!
Learn more about our savings account options and other services by clicking the link below.
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Published by Minster Bank. Includes copyrighted material of IMakeNews, Inc. and its suppliers
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