April is nationally recognized as Financial Literacy Month. It’s a great time to reinforce the tips and tools we can all benefit from knowing when it comes to being financially responsible.
Saving money can be difficult. There’s no ‘if’s, ‘ands’ or ‘buts’ about it – especially when the newest gadget is calling your name. Nevertheless it can be said without question that saving is not only about being financially responsible, but when done correctly, it can make us feel better and less stressed.
For many the concept of saving money is easy, but for others it can be challenging – whatever the reason. However when it comes to teaching our children how to save properly we must rise to the occasion – as the financial security of their futures depend on it. It is important to start teaching your children about saving early; and be sure to make the learning process fun and engaging.
Here are a few tips to help teach your children how to save, as a family:
1. Take a Family Trip to the Bank
Open a saving account for your child as a family. Making them a part of this process will allow them to ask questions and get firsthand experience interacting with a banker and the banking process. Plus an impromptu family outing should be fun!
2. Set Goals – Short and Long Term
Has your son/daughter been asking for a new video game or toy? Encourage your child to save their money, so they can purchase the item for themselves. Setting short term financial goals is a great way for your child to start saving, as it also creates the perfect opportunity for your child to learn the value of money. Make it fun by creating a board together to help them track their progress.
Long term goals such as college or a new car (if they’re an older teen) may take some time to reach, yet encourage your child to start saving if it’s something they really want.
3. Give Your Child Ways to Earn Money
Saving is an act of responsibility. It takes focus and determination, but most importantly it takes currency. If your child is under the legal working age, give them responsibilities around the house that will allow them to earn and save some money – something outside of their daily chores such as helping you cook dinner, water the garden, wash the car, etc. For younger children, tasks can be simple, such as feeding the family pet, getting the mail, or helping put away groceries.
4. Reward Your Child for Reaching Their Goal (s)
Encourage your child to set a savings goal of $100 (or less) dollars for one year, and then reward his or her achievement by offering a contribution. Think of it as being similar to how an employer matches your 401K retirement contributions. This not only compliments your child for a job well done, but it also provides a platform to discuss how investments and retirement plans work – a little premature, maybe, but imminent.
5. Allow Your Child to Participate in Money-Saving Practices
If the recession has taught us anything, it’s how to value a dollar. This is a message that we must instill in our children. Invite children to be a part of your money saving/budgeting practices such as gathering coupons for the grocery store or price comparing online for the best deals. This shows them that you are too saving money by being financially responsible, moreover it teaches children how to be smart and savvy consumers.
Financial literacy, like most education, must start early. Studies have shown that children born into strained financial environments often lack financial literacy, thus creating a cycle. While there is more that can be done by the way of improving financial literacy, the five tips above can be a stepping stone to help children of any age get on the right track to becoming financially responsible. Also be sure to check out additional financial literacy resources online, such as Money Savvy Generation for more tools and tips on ways to teach your child to save.
Mindy Mercaldo is the Illinois president and Chicago Market president for Citibank.