Building Blocks to Kids Savings
What's the most important money rule we can teach your kids? SAVING! As a parent, I know it’s vital to teach my children the importance of personal finance and saving money. However, many parents wonder how young is too young to teach kids money matters. In my option, no child is too young to get started If they can say “I want that” or “Gimme” then they are old enough learn the concept of money. Research shows children as young as 3 years old can learn and understand the basic idea of money.
When you decide to discuss the building blocks of money with your child, try to focus on the concepts and not the math. Initially, it’s not about teaching them that 2 nickels equal 1 dime, but about making decisions on how to spend that dime. Also keep in mind that even though financial literacy can be taught, most kids will also learn watching from watching us parents.
Here are a few money milestones for kids to reach when starting to learn about money.
Age 3 – 5:
In order to Buy things, you need money:
- Teach kids the value of money
- Identifying coins and bills by their value.
- Start basic counting skills
- Explain how items they want have varying cost i.e. a happy meal verses a new bike.
You Earn Money by Working:
- Tell your kids about your job and why you go to work everyday to support the family.
- Explain that a person’s job determines how much money they make. And that waitresses, teachers, doctors, sales persons, or business owner all make varying amounts.
- Encourage your child to think of ways to earn money, such as setting up a lemonade stand or doing chores around the house or for friends or neighbors.
Benefits of Saving:
- Explain to them that they may have to wait before they can buy what they want.
- Teach them about patience by encouraging them to save more for something of value rather than getting instant gratification. For example tell your toddler you will provide one piece of candy now, but if they wait an extra 15 minutes you will give him two.
- Keep their money in 2 different piggy banks: One for spending and one for saving.
- When they earn money from chores or receive money from their birthday have them split it up between each of the banks and explain that the money in the savings jar can go towards a something they really want that might cost more money.
Wants and Needs:
- When you go shopping, explain to your child what you need to get (the essentials) and also items that may be just a “treat” or want for the family if there’s a ‘little money” left over.
- On your grocery list show them items listed as wants and needs.
- As you choose items in the store write the price on your list and roughly add them up as you go. Then they can see if there is money left over for wants.
Once your child is able to understand the above milestones they are ready for their own savings account. Winnebago Community Credit Union has a really good Savings account option geared toward kids under 12 called Club Zoo. Your kids can earn savings reward stamps for each $10 deposited and once you fill your Club Zoo card you receive a free gift of your choice! Check out more information about Club Zoo Here.
Let us know if you have any helpful tips to teach kids about money in the comment section below!