Preparing Kids for a Healthy Financial Future
April is National Credit Union Youth Month. It’s a great time to start kids down the road to fiscal fitness.
Due to COVID-19, children are taking classes at home and spending more time with their parents, diving into valuable life-learning projects that will stick with them for years to come.
During National Credit Union Youth Month, financial literacy is a key project to add to the home learning activities. Whether they’re little ones with piggy banks or older kids with savings accounts, children who learn to manage their money sooner rather than later will be better prepared for adulthood.
Opening a children’s savings account at a credit union is a great way to encourage saving. According to data collected through the Community Impact Reporting Tool, Northwest credit unions helped their young members open millions of savings accounts, putting away an astounding $6.4 billion in Idaho, Oregon, and Washington. Opening an account online is easy and a great learning experience.
Throughout April (and year-round) parents can teach financial responsibility lessons in a number of ways. Here are some great ways to get kids started:
- Explain “wants” versus “needs.” Needs include shelter, food, clothing, transportation, and other basic necessities. Wants are everything else: the latest tech, dining out, movies, vacations, video games, extracurricular activities, etc.
- Show kids the household budget and explain the factors that went into calculating each category. When kids see their parents working hard to manage their money, they’re more encouraged to do the same.
- Give them an opportunity to earn money through an allowance and then set up a credit union savings account so they can watch their money grow every time they make a deposit. A piggy bank works well for small children who like to see and count their money regularly.
- Establish savings goals and rewards. Suggest that a certain percentage of gift money or allowance goes toward savings, then offer a reward when a goal is reached.
- Nix instant gratification. Help kids realize that it’s gratifying to save for fun purchases. Determine how long it will take them to save for something they want, such as a new toy, video game, or clothing item, and help them set up a plan.
- Allow them to make mistakes when spending. By tracking their money each week, they’ll see how much they could have saved instead of spent. Hindsight is a great teacher.
- Talk about money at home. Teach them about topics like interest rates. It’s important for kids to hear about how important money management is on a regular basis.
- Teach them to share their wealth with others — no matter how small. Whether it’s putting a dollar in a donation box or setting up a lemonade stand to support a favorite cause, kids will learn to find joy in helping others. Plus, earning the money creates an even stronger sense of appreciation.
Have a question or comment about this story? Email us!