The lessons we learn as children can have a profound impact later in life. So it’s worth asking: how well are we preparing our young people to save, invest, and manage their money wisely? They’re constantly bombarded with social media images of people living large, and by advertisers pushing the latest shiny objects. But the basics of personal finance are rarely taught in many schools – or in many homes.
Fact is, it’s mostly up to parents and grandparents to teach and model good financial habits. A great way to start is to open a checking or savings account for the young people in your life. Owning an account can teach important lessons about money, and encourage habits that can help them grow into financially savvy adults.
With their own bank accounts, your kids and grandkids can learn to work toward goals and make their own purchasing decisions. They can see how money grows over time, and experience the satisfaction of using their own funds to buy the things that matter to them. You can support this learning process by discussing your own savings goals, such as funding your retirement or paying for college. This will help them understand the importance of planning ahead for the things they want in life.
To encourage sound financial behaviors:
- Consider matching whatever amount they save. A little extra incentive can go a long way. For example, if they put ten dollars in the account, you can add the same amount – a kid version of the employer matching contributions that can help them build wealth in their retirement plans later in life.
- If you give them an allowance, link it to performing chores around the house. This will help them understand the connection between working and earning. An allowance for a job well done is much more meaningful than a no-strings handout.
- Set an example by demonstrating good financial habits – and talking about them. Explain the differences between wants and needs. Discuss why it’s so important to live within your means and avoid unnecessary purchases. Talk about your buying decisions and the thinking behind them. Don’t be afraid to discuss how much it costs just to meet basic obligations such as shelter, food, transportation, and so on. These types of conversations can teach some critical lessons about spending and budgeting.
Of course, a successful life is about much more than money. But the ability to handle money well is an important life skill. And saving is a habit we can start teaching our kids and grandkids at any age.
Opening a bank account can be a key step in helping them grow into financially responsible adults. At Taylor Bank, we offer a range of savings and checking accounts, and we’d love to help you choose one for your youngsters, based on factors such as interest rates, fees, minimum balance requirements, and account access. It’s a great way to teach some important money lessons, and set them on a path toward a lifetime of financial well-being.