Save as a Family

As a child, you may have gotten an allowance for doing chores around the house, but were you ever taught how to manage your budget? Teaching the children in your life how to manage their allowance earned as a child can have long-lasting effects, including how they manage their money in adulthood. Below are some tips on how to teach children to save and manage their money.

• Discuss the difference of wants and needs with them. Knowing the difference between needs (food, water, shelter, etc.) and wants (toys, games, etc.) can help children understand money is not only used to buy fun things but is also necessary to support their livelihoods. Consider showing them your budget and how needs should come before wants, so they learn what to purchase first.
• Teach them how to set savings goals. Start by having them pick out a toy or game they would like to buy. Then, have your child save for that goal until they have enough money to buy it. Examples of items to save for could be an action figure, video game, or any item with which the child is interested.
• Provide a place to save. After they determine how much they want to put in their savings, coordinate a place to put the money. An excellent example of a youth savings account is an Eagle Earners account at American 1 Credit Union!
• Act as their creditor! If a child wants something that costs more than the amount they have saved up, you could lend them the extra money and teach them to make small payments back with their weekly allowance. Teaching lending at an early age would be a great way to demonstrate interest by including it into their repayment!

These lessons can be useful for both the child and adult alike! Making finances a regular part of the conversation can create a bright future for childrens’ financial wellness. Read more from this Investopedia article about teaching children how to save money here. 

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