Teach Children to Save Day Good Financial Habits…Start Them Early!
April 13, 2022
Good financial habits, like so many other important skills and knowledge our young people acquire as they grow, should begin at an early age. In many families this early financial learning does occur. In many others, it does not. Evidence is mounting that many young Americans, including many young adults, have not learned basic money-management skills. They know how to spend but do they know how to prepare and live on a budget, save for a rainy day, manage credit and keep out of debt?
Young people come to our bank all the time. Many have little prior experience with credit. They don’t know their credit score, or even where they can obtain a copy of their credit report – for free. I’ve seen young couples whose credit history has kept them from getting a mortgage. I have seen young men and women get into financial trouble over a credit card and wonder…if they had early financial education would they be in this situation today?
With all the demands on schools to get through the normal course requirements, there is often little time left for formal financial education. As a result, financial education is our responsibility – parents, grandparents, uncles, aunts, older brothers and sisters, community leaders and any responsible adult who can help influence a young person’s life.
The good news is that every one of us, with a little thought and preparation, can be a literate financial educator. Think of the teaching opportunities offered by that first piggy bank or a gift of cash on a birthday. Income from a baby-sitting or lawn-cutting job offers an excellent opportunity to discuss the value of spending a little now, and saving some for the future. Trips to the grocery store offer a great opportunity to talk to a child about money. Go with a budget and plan to stick with that budget – foregoing the candy, for example, in favor of the milk and eggs.
A child’s first allowance is another time to talk about money and budgeting. Encourage them to think about various spending and saving options. Many teenagers make enough money to open their own checking account, perhaps a joint one with their parents. Some kids even make enough money to open an Individual Retirement Account. Imagine what a nest egg they could have in retirement if they start saving for it as teens!
Parents should also pay bills in the presence of their children, review credit card and banking statements with them and talk about how the family budget must account for food, clothing, rent and all the other miscellaneous expenses in life. Let kids see you make transactions at the ATM. At the gas pump and the shopping mall discuss how to pay for what you purchase. Do you use a debit card, a credit card or cash – and why? When the family’s credit card bill or bank statement arrives, show them the transactions you made together. Help them understand the concept of interest paid and earned, and the value of compounding interest on dollars saved and invested wisely.
Help the young people in your life practice saving and investment skills. If they work, make sure they save a portion of their income regularly. If they use a credit card, make sure they use it sensibly. Help them develop a budget. Ask them to think about their financial future.
If you know of a young person or group of young people who could benefit from learning more about money management, contact your local community bank to seek assistance with an in-person educational session.
Our young people control our nation’s financial future. Every one of us can be a resource to them. We owe it to them to do everything we can to help prepare them for the financial challenges and temptations they will certainly face ahead.
This spring, financial institutions throughout Pennsylvania and the United States are supporting Teach Children to Save, a national program – sponsored by the American Bankers Association’s (ABA) Community Engagement Foundation – created to help young people develop saving habits early in life. This year the official Teach Children to Save Day is Thursday, April 27. Learn more about this program at aba.com. Take every opportunity you can to make a difference in the life of a child or young adult.
