Although there is no right age to start teaching your kids how to save money, it doesn’t hurt to start introducing financial concepts at an early age. Here are some ways that you can teach your children about how to be financially responsible.
Explain Needs vs. wants
By distinguishing the difference between “needs.” which are things we must have to survive, and “wants,” which are things that we would like to have but are not necessary for survival, children will have a better understanding of how to save and, hopefully, will be wiser with how they choose to spend their money.
Set an Example
Experience can play a factor in your child’s development. If they see you upgrading your phone every year or using your credit card for impulse buys, they might think that is’ okay to do the same when they’re able to make those decisions. Sit down with your child and have age-appropriate conversations about how money is earned and where money can go towards, such as the house, cable, etc. Establishing good habits early on can set your child on the right financial track.
Show Them the Value of Money
It can be tough to explain the value of money to children; but, you can educate them through a visual representation that shows the concept of spending and saving. The next time you give your child money, whether it’s from an allowance or a gift, have your child split up their earnings into two categories: spend and save. By seeing the money accumulate over time, it teaches them the concept of saving. You can also add in “donation” as a third category to teach them about the importance of giving to others.
Open a Savings Account for Them
When your child is ready to take their savings to the next level, stop by your local First Mid banking center to open a Kids’ First account for them. First Mid specifically designed this account to help children build a savings balance and learn about the value of money. For more information, check out our Kids’ First Accounts.
