Managing money is a foundational life skill. There are so many factors involved and so many open-ended questions at play. How much should you be saving? When is it worth spending more? How do you keep spare change from burning a hole in your pocket? It takes years of discipline and training to perfect this skill, and ongoing self-control to maintain it.
That’s why it’s best to give your kids a head start on money management and saving. As a parent or guardian, remember that the lessons you plant today will take root and blossom, enriching your child’s life for years to come.
Ready to open an account for your child? Does your child already have one? Read on for three steps to take for ensuring your child gets the most out of a new or existing account:
1.) Set a Goal:
Now that your child’s money will be sitting in an account instead of a piggy bank, let them use this opportunity to save up for something big. Sit down with them and discuss what they’d like to save for. You can create a long-term goal, like saving up for college or for a first car. Also, establish a short-term goal, like a new gaming console or a hoverboard.
Set a date for your goals, and then set up a savings calendar for illustrating how much money needs to be saved each month to reach the intended target by the designated date. Discuss ways to add to the savings, being sure to include money from birthday gifts, summer jobs, allowances, and chores.
2.) Bank Together
Whether your child is a first-grader or a lanky teenager, if this is their first time owning an account, they’ll need you to show them the ropes.
Always bring your young child along with you when you stop by Stark Federal to deposit into their savings. Show them how it works and let them see the account balance growing. If your child asks you to withdraw money from their account, make sure he sees how this takes away from the balance in their savings.
For teens, you’ll need to walk them through that first deposit and withdrawal. When they’ve probably got the hang of it, it’s time to take a step back and let them be on their own. They’ll feel like a million dollars managing their account independently.
However, share with your teen that every swipe of their debit card also means a dent in their account balance. Also, be sure to warn kids of all ages about security. They should know to never share their account information with anyone and to keep their debit card in a safe place.
3.) Monitor your Child’s Activity
Don’t aim to be a helicopter parent, but do keep an eye on your child’s account. If they're depositing a lot less than planned, ask them where their money is going. If your teen is maximizing their daily ATM allowance, speak to them about money management and impulse purchases.
Your teen’s daily withdrawal limit may need occasional adjustment, so keep a careful watch on spending to see if any modifications are needed.
Remember: Every financial lesson you teach your child today equips them with money management skills for a lifetime.