You want your child to be financially savvy. But where should you start? Opening a kids' savings account can teach your children valuable lessons they might not learn otherwise. Here are five of the most important takeaways.
1. Money Should Be Kept Safely
Young children don't automatically know that money should be kept in a safe place. They often carry it around with them, fidget with it, show it off to friends and then wind up misplacing it. Opening a kids' savings account demonstrates for children the benefits of having money in a place where it is completely protected.
2. Delayed Gratification Builds Self-Control
Children need to learn that they can't have everything they want, when they want it. You may be able to pull out your credit card and buy whatever your child is asking for right at the moment, but doing so will teach impulsive shopping habits. Instead, set up kids' savings accounts and teach your children how to save up to make large purchases.
3. Saving Is an Important Part of Life
Children should learn early on that saving money isn't just something that's "nice to do" if they feel like it. Require that they save a certain percentage of their allowance in a savings account. This helps them understand they should always set aside a portion of their earnings before spending money.
4. Setting and Reaching Goals Is Powerful
It's important to teach children how to set goals for themselves. Setting and attaining monetary goals will teach your children how to set and attain goals in other facets of their lives. It also boosts your child's self-esteem as he or she learns that they have what it takes to make their dreams come true.
5. The Compound Interest Is Worth It
Older children who have been saving money for a long time will enjoy seeing the compound interest accumulate in their accounts. They'll realize that the more savings they have, the more money they earn from these savings. However, it's never too late for parents to teach kids about the benefits of compound interest. Start an account and point out how much money they could make in a month, a year or a few years if they let the money sit instead of withdrawing all of it at regular intervals.
Teaching children financial responsibility often starts with opening a kids' savings account for them so they can learn how to wisely manage their relatively small earnings. However, it's not the only way to help children learn important financial skills. Setting your own example of managing money wisely and sticking to a budget is a powerful teaching tool, as children may be more prone to copy your behavior than they are to follow rules over the long term. Additionally, Coosa Valley Credit Union offers some great tools and incentives that will help your kids develop good spending and saving habits now and in the future. With ongoing training, your kids will become disciplined adults who know how to manage money wisely and enjoy the benefits of being financially solvent at all times.