For many parents, teaching children the importance of financial responsibility might seem like a task better suited for the future. After all, what could children possibly be financially responsible for? While this line of thinking is certainly valid, it further proves the importance of educating kids early on the basics of savings to set them up for a more successful future. Here are a few tips to help you develop healthy money-saving habits for your children:
- Discuss the importance of savings, budgeting and setting financial goals- Many parents – 41% according to a 2021 survey by T. Rowe Price – don’t like to talk with their children about money. Discussing these topics openly and honestly early on can establish a priority on saving money and, in turn, create responsible habits that last a lifetime.
- Give them a weekly allowance- Providing children with an early source of income teaches them the value of working to earn their own money and creates a good starting point for showing them how to save that money.
- Younger children can save in a piggy bank, and older children can open a checking or savings account in many financial institutions– Guardian members can open Kids Club Accounts for their children 12 and under. Learn more about our Youth & Student Accounts.
- Develop a budget with them- Providing your child with their first source of income is a good start, but teaching them how to allocate their money is a great way to build off their savings journey. Help them set aside a portion of their allowance towards achieving various long and short-term financial goals, such as saving up for a new bike, or getting an early start on their college savings.
- Act as their creditor- While it is important to teach children how to put money aside until they have enough to purchase items themselves, it can be equally valuable to lend them the money up front to make these purchases. Acting as your child’s creditor and having him or her pay you off in installments is a good introduction to eliminating debt and building up credit.