Savings rates in the United States are abysmally low, and many Americans are just a few paychecks away from homelessness. While parents can promote saving money to their kids, oftentimes a positive banking experience early in life is the best way to promote smart money management.
Look at Interest Rates and Fees
While the early bank training may simply be to show how money stacks up in their savings account, showing how interest adds up can also be helpful. While a positive experience at a brick and mortar bank is a great starting point, Magnify Money advises exposing kids to the options and dangers of on-line transactions. There are many digital banks with lower fees and better interest rates, but not all online money transactions are safe.
Access to Educational Resources
Many brick and mortar banks offer promotional characters and even activity books that make banking in person more fun. Credit unions, in particular, offer many educational options for investing in the customer, whether that’s debt counseling for adults or an explanation of compound interest to young children. MX points out that, with financial health increasing as a priority among consumers at large, it is in everyone’s best interest that financial institutions take note and make themselves available for educational conversations regarding the financial health of their customers.
Create a Timeline at Home
Once your child has a bank account, be sure to make space in the account for them to make withdrawals. For example, if your child gets an allowance, you can require them to save a portion of it. If your child expresses a wish for a particular experience or a toy, help them to figure out how they can afford it. Windgate Wealth Management recommends helping them mark out the saving requirements per week or month to make it possible for them to purchase what they want. One of the greatest challenges to learning how to handle money is how to resist impulse purchases. By helping your child plan out larger purchases, you can also help them learn to reconsider that desire. In this way, they can learn to buy only what they really want in the long term, instead of what they want right now.
Money management is a skill that takes time to build. If your family struggled with money when you were young, you may not have learned healthy money habits. Even if you did learn good money management as a child, your child may have an easier time understanding it from an authority figure outside the family. A brick and mortar banking employee can help solidify these concepts.