Money: depending on who you ask, it makes the world go ’round or it’s the root of all evil. Either way, it’s a critical part of the world we live in and knowing how to save what you earn is a critical skill for everyone to learn. At Central Willamette Credit Union, we believe that good saving savvy should start at a young age, which is why we’ve started our Kids Kash Savings Accounts.
In this blog, we’ll look at why it’s important for children to learn how to save money, useful tips to help them accomplish it, and how a Kids Kash Savings Account can help.
Benefits of Teaching Kids to Save Money
Habits start when we’re young, both for good and for ill. Childhood is the time when our brains are developing, meaning it’s one of the easiest times to instill good habits and expectations that will last a lifetime. As a result, the benefits of teaching kids to save money will be ones that your kids will take with them for years.
Here are just a few of the many benefits of teaching kids to save money:
It Helps Them Learn Discipline
When children are using their own money to buy the things they want, it teaches them a hard-earned lesson that even many adults don’t always understand: have the discipline to put off immediate gratification in pursuit of greater satisfaction.
When your children want a new video game or a toy, saving to buy it with their own money will show them that every candy bar or milkshake they buy will take them further away from their long-term goal. This will teach them the discipline to put off more frivolous, in-the-moment purchases. This is a lesson that many of us could use!
It Teaches Them the Value of a Dollar
One can hardly blame a young person for wanting to buy things. Aside from the inherent impulsiveness of youth, kids don’t really know what it means to spend “a dollar”—and why should they? They don’t work and they don’t manage budgets because they’re kids doing kid things. When you tell them that the videogame they want costs $60, you might as well be telling them that it costs a million dollars—$60 is a meaningless concept to them.
When your kids start saving money for themselves and realize that $60 equals three weeks of doing chores, they’ll appreciate the value of a dollar more.
It Sets Them Up for Success Later
Let’s be honest: most of us probably aren’t as good at saving money as we’d like to be, whether it’s for long-term projects or just a rainy-day fund. Teaching a young person to save when they’re not even a teenager will help them save money for long-term goals or even retirement once they enter the workforce. The skills and tips they learn while saving will be skills they can apply to adult life much further down the road.
It Helps Them Appreciate What They Have
This goes hand-in-hand with the point made above about appreciating the value of a dollar. If you give a child a game or toy, they might forget about it when the next popular thing comes along. But if that child saves up to buy that game or toy, they’ll appreciate it much more.
Ways to Teach Kids to Save Money
We’ve looked at why it’s important to teach kids how to save money, but how can you actually do that? If your child is old enough to get a part-time job, then that’s one thing, but what if they’re too young for that?
Give Your Child an Allowance
The time-honored tradition of giving your children regular spending money is easy and will help them learn to set up a budget. The amount of money you give them every week depends on your own finances and the child’s age—one common tip is to pay $1 per year of their age, though that may be getting outdated with inflation!
While it’s important to encourage your children to save their spending money, it shouldn’t be mandated—let them choose to save it, instead of spending it on frivolous things. (Refer to the earlier point about discipline). How they choose to use their spending money is their business … but if they want something nice, they’ll have to save up.
Reward Them for Extra Chores
Ask five different childhood experts if they think it’s a good idea to financially reward children for doing chores, and you’ll get five different answers. It’s true that children should learn to take care of their own environments without any financial reward—if only we could all get paid for doing the dishes every night! However, a financial motivator is a very powerful thing, and this will further help children understand the value of a dollar for their labor.
One compromise solution is to offer them financial rewards but only for chores that go above and beyond their normal expectations. Doing the dishes is what’s expected of them, but washing the windows? That deserves something extra. Similarly, you can reward them for exceptional grades—but make sure you’re fair with all your kids.
How CWCU Kids Kash Can Help
Central Willamette Credit Union believes in helping kids learn to save money, which is why we’ve launched our Kids Kash Savings Accounts. These will teach children about saving and compound interest.
You can open a Kids Kash account with a starting deposit of just $5, and you can choose to automatically transfer your child’s weekly allowance from your own account. Your child will get a Kids Kash punch card. They’ll earn a punch for every $5 they deposit and then win some neat prizes when they fill it up.
Interest on a Kids Kash account is compounded daily and paid monthly, so it’s a fantastic way to teach kids about how saving money can help them make money.
If you’re interested in opening a Kids Kash Savings Account, contact Central Willamette Credit Union today.