If there’s a golden rule when it comes to saving and building healthy money management habits, it’s this: the earlier you start, the better off you’ll be in the long run. Money management is probably the last thing on the minds of most kids. There are concrete steps you can take as a parent or guardian to help ensure that your children know how to save for their future. If you plant those seeds with care, they’ll take root, and your children are much more likely to achieve financial success later in life.
Kids are much more likely to spend rather than save. Even parents who try to teach their children about finances, such as by giving them a regular allowance, might find their lessons overshadowed by messages that come from advertising, or from children’s peers. By the time most young people graduate from high school, they know all about spending and very little about saving.
Consider these facts:
Among U.S. teens, 40 percent say they are saving, and 24 percent say they are saving more than they did last year, with 21 percent saying that are not saving at all. (Sources: Marketingvox; Rand Youth Poll; Seventeen magazine; Packaged Facts)
Among those aged 25-34, 78 percent say they don’t have enough money to live the kind of life they want. Among those aged 18-34, 39 percent say that they had either been living with their parents or moved back in with them as a result of the current economic situation. (Source: Pew Research, 2012)
So what lessons can we teach children and young adults to prepare them for financial success?
Five Tips for Parents:
Parents play a crucial role in their children’s financial success in life. Here are five tips for parents and guardians:
Start early — Before they even start school, children begin to understand how to manage money.
Set goals — Have children write down things they want and what they cost. Teach them about making wise choices and saving.
Pay a Modest Allowance – Just a small amount can help children learn how to budget and save.
Make a budget — Start with three categories: spend, save, give.
Use Free Resources — Check out your local library, and Wells Fargo’s Hands on Banking® financial education website available free at handsonbanking.org.
A tip for children ages 3-7: Take three jars and label them separately: Spend, Save, Give. Help the children split up their money into each jar and watch it grow as they save and disappear as they spend.
A tip for pre-teens, ages 8-12: Create a short-term savings box. Have the pre-teens choose something they want (i.e. shoes or a video game system.) They will learn the value of saving when they save enough to purchase the item.
A tip for teens, ages 13 and up: Open a savings account for long-term savings. Have teens save a certain percentage for a few years to make a bigger purchase.
Set aside time to talk with your children about smart money management, and ask your banker for more saving and budgeting ideas and advice. Your child’s long-term financial security is at stake. By starting early, you can help your child develop healthy financial habits that will last a lifetime.
Robert Green is a personal banker for Wells Fargo in Homer. He can be reached at 235-8151 or firstname.lastname@example.org.
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