It’s never too soon to start saving. Financial experts will tell you to start saving for retirement when you get your first job, to save for a home long before you’re married, and for college when your first child is born. The same advice goes for teaching kids to save. Getting them on the right path early on means they’ll have formed positive saving habits for bigger life goals.
Pick out a piggy bank
Take your kids shopping to find a creative piggy bank that matches their personality, or decorate a plain one together. Go on a coin hunt around the house, any loose change they can find goes right into the jar. This sets the perception that saving is fun, not a chore, and something they can be proud of.
Take it to the bank
Open a savings account when your child starts elementary school. While this may seem a little early, it’ll give you a chance to give their savings a little boost and make them feel a little more grown up. Start by giving them the minimum deposit; then, add whatever they’ve saved up so far. They’ll be at the age where they’re learning about coins and the value of a dollar in school, and they’ve probably started pitching in around the house – making beds, picking up toys, and setting the table. Each of these chores can be used to earn a little extra income, which means a little more savings in their deposit account.
Set up incentives
There are a few ways to do this, and you may choose just one or work in a combination of all three.
- Start a matching program for your deposit account. For example: Each time they make a deposit of ten dollars, you’ll add in another ten. You could also choose to do a percentage of what they add, just like a 401k contribution.
- Make saving a game. For each milestone your children reach, $50, 100, $150, $200, they receive a different reward. Some ideas could be being treated to ice cream, getting a new toy, or getting a week’s allowance without having to do any chores. Let them pick out some of the rewards so they feel invested in what they’re earning.
- Go for the goal. As they get older, change it up a little. If there’s something they want, like a new guitar or a video game, encourage them to save for it. Once they’ve saved up what they need, agree to pay 25-50% of the cost if they save the rest. This helps them feel like they’ve accomplished something on their own, and doesn’t drain the account every time they make a purchase.
Open a high-yield savings account
By the time your kids are in middle school, they could have some pretty significant cash lined up. You might even be a little jealous. Take this time to teach them more about savings account interest rates. On a standard savings account, the interest rates are pretty low, and they aren’t earning much more than they put in. However, with a high-yield savings account, their return on investment will be much higher. High-yield savings accounts have a minimum balance to open, which means you may need to wait until they have a few thousand dollars put aside, but it’ll be worth the investment in the long run.
Talk to them about their long-range goals
A high-yield savings account could help your children save up for college or a new car. As they get older, ask them what they want to use their savings for, and be honest about where you expect them to pitch in. Maybe they need to buy their own gas, or pay for their music lessons; or, maybe it’s time to open up a joint checking account to give them more access to their savings. Work out their saving and spending needs together; then, talk to a representative at your local bank to find out which savings account interest rates and options are best for you and your children.
Sponsored content was created and provided by RBS Citizens Financial Group