When kids learn to save, the value goes far beyond their account balance.

Love and money can be big influences in life. Of course you love your kids and grandkids, but are you setting them up with solid money skills? An ideal place to start your child’s financial education is with a youth savings account because so many other money lessons go hand-in-hand with savings. Let’s take a look at ten reasons the value of youth saving goes beyond a child’s account balance.

1. Learning how to handle money

Kids who save money learn how to handle money, including the difference in denominations and coins. They also learn the importance of keeping cash and debit cards safe. If they receive a check, they experience what it means to endorse a check with their signature so they can get cash or make a deposit.

2. Understanding the value of money

When kids save and spend their own money, they learn first-hand how far a ten-dollar bill goes. Like how many ten-dollar bills are needed to buy that super-cool remote-control car. Also, when kids use the money they saved for the things they want, the value of comparison shopping becomes very clear.

3. Understanding the difference between a want and a need

Discerning between a want and a need can be difficult even for adults. Kids who are prompted to consider if something is necessary or nice to have can develop this decision-making skill long before they start adulting.

4. Discovering the power of interest

A piggy bank is a useful savings tool, but kids need to know that their money can actually increase when it’s deposited in an interest-bearing account. Discovering that their money can grow helps motivate many kids to save. After kids grasp the idea of simple interest, you can share how compound interest works.

5. Introduce them to the concept of exchanging work for money

Once kids realize that money is needed to buy things they want, it’s a prime time to introduce them to the concept of exchanging work for money. From chores and lemonade stands to mowing lawns and selling crafts, there are lots of ways kids can earn their own money.

6. Setting goals

Two things happen when kids set and achieve savings goals. First, they understand that some things are worth waiting for. Second, they experience the feeling of success that comes with meeting a financial goal. Learning these two things sets them up for successes later in life when they want things, like a car or spring break trip, and much later when they have goals like buying a home or starting a business.

7. An opportunity to be comfortable talking about money

People who are comfortable talking about money are better equipped to negotiate deals and salary offers. It’s also easier for them to seek help if they run into financial problems like an unexpected bill or rising credit card debt. Talk to your kids about money so they’ll be comfortable talking about money.

8. Better relationships in the future

Saving is a fundamental money skill and research shows that kids who develop financial literacy carry their habits into adulthood. A BYU study shows that their good money management skills will result in more fulfilling relationships with significant others in young adulthood.

9. Learning about online banking and safety

Older kids who have a savings account get the opportunity to learn about online banking and safety. They’ll learn why it’s vital to keep passwords secret, how two-factor authentication works and how to access their balance and statements.

10. Set the foundation for financial independence

Kids who learn to save gain a foundational skill that will help them become financially independent of their parents. The savings habit that allows a teenager to get a new pair of sneakers is the same habit that will help them accumulate money for an emergency savings account or a home down payment

Encouraging kids to save

Consumers has fun ways for kids under 12 to save; check out the Wimee Kids’ Savings Club. We also help teens ages 13-17+ develop money savvy with teen bank accounts and debits cards.

Also, we’ve seen many Consumers members encourage their kids and grandkids to save by matching their savings or adding a set amount when kids reach certain savings milestones. For example, they may match savings with an amount equal to 1% to 5% of what their child saves, or when the child achieves a goal such as $100, they add an additional $10.

 

Federally insured by NCUA