10 ideas to help you teach kids to save money
Given our new perspective on money, my wife and I have been looking for opportunities where we can involve our children and begin teaching them about money.
Here are 10 ideas to help you teach kids to save money and about overall money management:
- Create a savings account for them. Preferably use one of the new online high-interest bearing banks, such as ING Direct’s Orange Savings.
- Start a matched savings program matching their savings dollar for dollar. This is a great way to teach them both about savings and 401k programs.
- Encourage them to find opportunities for income by starting a small business pet sitting, home sitting, babysitting, mowing yards, washing cars, etc.
- Give them a set allowance, and have them use this to for clothes, school supplies, gifts, charitable donations, savings, items they want and other expenses.
- Create a checking account for them with a debit card. This is a great way to teach them how to manage their money with a bank and how to balance the account. Allowing them to use the debit card will help them understand that the money on the card really comes from somewhere.
- Make their savings automatic. Have money auto-drawn from their checking account and moved into their savings account.
- Take them to the bank and let them make their deposits. This will teach them about how the bank works, the type of forms necessary and how to interact with the bank personnel. Most banks are very kid friendly, plus they can grab a sucker!
- Create a brokerage account for them and let them buy individual stocks or mutual funds. There are tons of learning opportunities here such as learning about risk, how to pick stocks, and the benefits of mutual funds over stocks just to list a few.
- Involve them in the family finances. We have heard of a number of parents that advocate sharing all aspects but we don’t share our income. We do however discuss our house payment, utility bills, car payments, etc. This gives them and understanding of how much things really cost. We don’t share our income as we don’t want the kids accidentally or intentionally sharing this with others nor do we want them to stress about our money.
- Set-up online access to all of their accounts. This allows them to keep track of their money, watch their savings grow and teaches them how to use on-line banking.
I’ve read that some parents give their children credit cards so they can learn and understand how they work. While I can see the potential learning value, this is something I won’t do as I don’t believe in them.
I would enjoy hearing any ideas you may have or your feedback on the items above and in particular your thoughts on kids having credit cards.