Seven tips to make a savings account an on-going educational experience
Youth can begin investing in their future by opening a savings account. Parents can capitalize on the learning opportunity by using these seven easy tips throughout the childhood years.
Starting to save early in life is a wise financial habit. Even young children can begin investing in their future by opening a savings account. As a result of research published in “Scholarly Research on Children’s Savings Accounts,” the Corporation for Enterprise Development encourages families and communities to establish savings accounts for children of all ages.
Numerous learning opportunities are possible after opening a child’s savings account. Michigan State University Extension suggests these seven tips to make the account an on-going educational experience:
- Set the tone that money is a topic the family can talk openly about. Involve children in conversations about money – compare prices at the grocery store, share the delight in a raise at work and the challenges in a raise in cell phone charges.
- Involve children in every step. Children learn kinesthetically, or by using their bodies, so take your child to open the account and ask them for the answers needed to complete the paperwork. For example, “The form asks for your first and last name; what should I put there?” and “What is our home address?” Subsequently, allow your child to complete the deposit slip, hand the slip and money to the teller and open the envelope carrying the account statement when it arrives at home in the mail.
- Use financial terms when interacting about money. A check in a birthday card from Grandma is “income” and having your child deposit a portion of that gift into their savings account is an “expense.” Talk about savings being “delayed gratification” and the long-term value in such self-discipline.
- Keep the money theme going in other areas of your child’s life. Read bedtime stories that center around financial concepts. “Alexander Who Used to Be Rich Last Sunday” and “A Chair for My Mother” are two examples, but there are many others; ask your local librarian for recommendations.
- Sit down and review the details each time your child’s account statement arrives via email or postal mail. Youngsters will be engaged because it is their money! Introduce the term “interest.”
- Let children see how adults manage money. For example, pay bills when and where children can see; that opens the opportunity to start a conversation about bills and the importance of paying them on time.
- When appropriate, involve children in financial decisions including what activities the family might do together on the weekend. Establish what the family budget can afford, the costs associated with the potential activities and then together discuss the options. Introduce the concept of “opportunity cost.”
Establishing a savings account and being intentional about teaching children about money can have life-long implications. According to the University of Kansas School of Social Welfare, Assets and Education Initiative, low and moderate income children with just $1 to $499 in savings for college are three times more likely to attend college and four times more likely to graduate from college.
Starting to save early in life can literally change the financial trajectory of children’s lives!