When it comes to teaching kids about saving money, it helps to focus on one important concept: the future. Most children don’t have long-term plans for their cash. When they get money, they want to spend it all right away.
As parents, we know that’s a slippery slope. If you burn through your cash, you can’t cover unexpected costs, or pay for things you really want but can’t afford right now. So how do you get your kids to think about their “future money”?
1. Open a savings account with them
A savings account at Redwood Credit Union is a great way to illustrate the concept of a financial future. Let your children know that each time money comes in, they should save a portion.
Then, when they want to buy something that costs more than they have, they can withdraw. Be sure to open the account with your child to ease them into banking at an early age.
2. Explain wants vs. needs
Wants are fun, but not necessary items such as toys and candy. They’re transitory and can deplete your money quickly if you’re not careful. Needs are ongoing expenses for things you can’t live without, like meals, clothing, and school supplies.
Obviously, you won’t ask your kids to buy the family’s groceries, but explaining wants vs. needs helps prepare them for the future.
3. Create a savings goal
Saving for the future is an abstract concept, so ask your children to pick concrete goals. Do they want a new bike? A video game? Have them pick something that requires dedicated saving, and remind them of their goal along the way. Maybe print an image of it as a visual cue to keep saving.
Saving money can be challenging for kids, but by focusing on the future, you’re helping them understand a very important financial concept that will pay dividends for the rest of their lives.
To learn more about RCU’s savings programs for kids and teens, visit redwoodcu.org/youth.