Savings accounts can be a great tool in the task of teaching kids and young adults about managing money. If you start young, you can instill a better sense of money management than if you wait until late in their teenage years. Here are a few tips on how to use savings accounts as a teaching tool.
Most kids get an allowance of some sort, even if it’s just a couple of dollars a week. A great way to apply allowance towards savings accounts is to give your kids the option of adding a portion of their allowance to their savings account each week. By doing this, they will still have a bit of money to spend on their own, but they will also be able to watch their savings account grow. This will also give you the chance to explain interest rates to them, and help them to understand that they will eventually have more money in their account than they originally put in.
Teaching kids early about being responsible with money is very important in their development. When kids learn how to manage money at a young age, they are more likely to continue to use those skills as they get older. A great way to do this is by allowing them to take a small amount of money out of their savings every once and a while. Allow them to either choose to spend their money on whatever they would like, or keep the money in the account to grow even more over time.
The Old Fashion Way:
People of several religions have always held a strong belief of saving money, even at a young age. They would teach their children put 10% of everything that they earned in a savings account and never touch it. That way if they ever needed it, it would be there for them to use. You could use a variation of this to teach your kids the importance of savings. Instead of opening a savings account and letting them dip into it, you could create a Certificate of Deposit for them. The certificate will increase in value over time, and whatever money comes from it can be put into their savings account. If you show them the value of not touching their money, it could help them to be more careful with their money in the future.
Classic Savings Account:
What better way to teach kids about savings accounts than the good old fashioned piggy bank? By allowing kids to put their money in a piggy bank, and visually see the amount growing, they will learn the responsibility of having a “savings account”. You can use the basic piggy bank as a step-ladder towards real savings accounts at a bank. The best thing about piggy banks is that many of them make it impossible to access the money without damaging the bank. This means your child will have to wait a while before they can break the bank Teach your kids that if they can learn to save their money and spend it wisely by using their piggy bank, when they get older they will be allowed to have a real savings account at a bank.
These are just a few ideas of ways to use savings accounts to teach kids about handling money responsibly. If you teach them at a young age, chances are that they will be safer with money as they grow up. Give them the tools to be responsible now, and it could save them from financial problems in the future.