It’s never too early to begin teaching your child the value of saving money and building financial security. Whether you wish to start saving money for them before they’re born, or you decide to wait until your child enters grade school and understands basic mathematical and money concepts, it’s important to start teaching these vital life skills that will benefit them their entire lives. Whether you’re a parent, grandparent, or close friend, it’s never too early to start equipping the children in your life with the financial literacy tools they’ll need to succeed.
How To Start
First, decide exactly how and when you’d like to create a savings account for your child. It really is never too early to start; you could begin before they’re born by saving up change in a piggy bank and then placing it into a savings account after a year or two. You could also wait until they enter school and take them to the bank with you to open their own account. This way, they’ll develop an understanding of banking and you’ll be there to guide them through the entire process.
The next thing you’ll want to do is to open a savings account for the child. Shop around for banks in the area and ask about the benefits and requirements for each account. Compare the various options to make your informed decision. Keep in mind that while most accounts require an initial fee for opening the account, there’s no monthly fee or minimal amount required if it’s for students or minors. Take your pick and open the account.
Here’s where the educational process comes to play. While you may be tempted to give your child or grandkids cash for their birthdays or for holidays, don’t forget about the other option. Send a check and make a visit to the bank together to deposit it. By introducing the act of saving and depositing money from an early age, your child will be more inclined to follow suit when they’re older.
The best part about gifting checks to young children is that when they’re a bit older, they’ll have built a nice reserve. This could help pay for summer camps, first cars, even books for college. You’ll be gifting your child with so much more than just the money: you’ll be granting them the independence to make smart choices with their money.
No matter how much money is initially placed in the account or how much your child decides to put in over time, it will build up interest. Even a little at a time is incredibly beneficial. As mentioned previously, this money can be used as a fund for college. Studies have shown that children with savings accounts, even with small amounts of money, are much more likely to pursue higher education after high school.
Focus on the Tool
Keep in mind that like all things in life, you’ll be teaching your child an invaluable tool. Encourage your child to save up for new toys or those extra back-to-school sneakers that they just must have. This will help relay the cost of items. It will also help spur additional conversations about the market and economy.
Don’t forget to offer incentives! Why not offer to match a certain amount of money once they reach a savings goal or teach them about investments to increase the money they’re saving. While financial literacy may seem like a dry subject, you’ll be surprised at the insightful and informative conversations that follow!