As parents, we know it’s important to teach our kids the basics—how to ride a bike, how to drive a car, how to cook, and how to study—but one of the best gifts we can give our kids is teaching them how to manage their money well. Having healthy financial habits early in life will set them up for lifelong success. What is the best way to save money for kids and teach them good money habits? When should you start? The short answer is that there are many simple, practical strategies parents can use to instill good money habits, such as setting savings goals, using allowances wisely, and making money lessons fun. You can also take advantage of programs specifically designed to teach kids money skills, like Capital Credit Union’s Greenlight® account. Ultimately, the best way to save money for your kids will be different for each family. Here are a few helpful strategies to help you get started on the right track.
Start Simple – Use Real-World Examples
Most people learn best by practicing. In fact, we retain 75 percent of what we learn through “doing.” You can introduce the concept of money to your kids, even at a very young age, by involving them in everyday experiences like grocery shopping. For instance, have your kids count out change at the store if you’re paying with cash. Help them compare prices while shopping and have them choose the best item based on value. Have honest discussions about “needs” versus “wants” so they get used to being mindful about spending and saving. Establish chores or small odd jobs for family members or neighbors where they can earn some money of their own, which will help them better understand that money has value and takes effort to get.
Teach Money Management with a Small Allowance
Having access to their own, earned money through an allowance gives children a greater appreciation for the value of money. It will also give them a chance to practice managing money in a safe, structured environment. Work with your child to set up categories like “savings” (for big items), “spending” (for needs or things they want immediately), and “giving” (for people or causes they care about). If they want a bigger or more expensive item or experience, encourage them to save money toward it, and show them how saving will affect the other categories, such as having less money to spend immediately. You might even offer to match their savings by offering $1 for every $5 they save to give them a simple example of how interest on savings accounts works and motivate them to think long-term about their money. Naturally, your first impulse if they spend all their money and then cannot afford something they want is to bail them out immediately. However, allowing them to experience the natural consequences of their choices is a better way to encourage accountability and will provide a more lasting lesson.
Make Progress Tangible with Goal Setting
Achieving goals is one of the best ways to build confidence. Work with your kids to identify something that they want (not need), and help them calculate how much they need to save per week or month to buy it. Using a visual tracker, like a chart, can be very helpful for them to actually see their progress. Celebrate milestones as they work toward their goal to reinforce the positive aspects of saving, patience, and planning.
Learning About Money Can Be Fun!
Don’t be afraid to throw a little bit of fun into the mix. Go old-school with some money-based board games like Monopoly®, the Game of Life®, or Pay Day®. Set up a family store where kids can use money (either play money or allowance) to buy special snacks, small toys, or privileges. Incorporate child-friendly digital tools or apps that gamify earning, budgeting, and saving. In our increasingly digital world, these types of interactive experiences meet kids where they are and offer a little excitement while helping them learn in a comfortable and familiar environment.
Take Advantage of Financial Tools Like Greenlight®
Financial tools like Capital Credit Union’s Greenlight® program are a great stepping stone to teach kids good money habits in a practical and safe way. Basically, it’s a debit card and banking app designed for kids and teens to use with helpful guidance from parents. Using the app, kids can set savings goals and track progress. Parents can track spending, block unsafe spending categories, set spending limits, deposit allowances, and monitor activity all in one place. If your teen has a job or does small chores for people outside the family, they can set up direct deposit or get paid through a QR code that links to their account. There’s even a financial literacy game to help kids learn a fun way. Your child’s debit card is FDIC-insured up to $250,000 through Greenlight®, and you get real-time texts about the activity on the card to help with fraud detection. Having a debit card of their own, with protections and parental guidance in place, gives your child real-world experience to prepare them for adulthood—safely.
Set the Tone Early
Children often mirror their parents’ relationship with and attitude toward money. When you model responsible spending, setting savings goals, and budgeting, you set your children up for lifelong success in dealing with money themselves. The best way to save money for kids is by making it practical and fun and giving them a chance to have a little independence. You know your kids better than anyone, so choosing the strategies outlined above that work best for your family will have the most impact.
Explore Greenlight at Capital Credit Union
If you’re interested in learning more about the Greenlight program, reach out to talk to a customer service representative and get started today. If you’re not a Capital Credit Union member yet, it’s easy to join and start taking advantage of all the benefits of a credit union membership. Teaching good money habits to your kids helps them build a strong financial foundation for the future. We’re here to help you every step of the way. .jpg)