Money Smart Kids Saving Smart

SVDCU wants to share tips for teaching children good habits about money management. The information was originally published in Smart Parenting - Money Smart Kids.

Saving Smart

Saving money takes discipline. To make it a habit for life, teach your kids about saving as soon as they have a regular income—i.e. an allowance. Help them understand that all the money they receive is not for spending immediately on candy, toys or games. Kids should learn that they have responsibilities—to them­selves, their loved ones, their future and their com­munity. Teach them that they should save money for several reasons, including emergencies, common expenses (such as birthday gifts or lunch money), future purchases, investing and charity.

The 3 Little Piggy Banks

Some experts recommend kids keep their money in at least three piggy banks—one for spending, one for saving and one for charitable giving. Your kids can use envelopes, plastic baggies or any other containers—as long as there are three separate ones clearly marked and explained. Decide what percentage of your kids' allowance and gift money should go into each bank. A common formula is at least 10 percent for savings, 10 percent for charity and the rest for spending. Whatever formula you use, stick to it. Your kids need consistency to learn the routine.

Save Yourself

Model the behavior you want your kids to exhibit. The older they get, the more they'll notice your methods of saving and spending. Let your kids see that you put off immediate gratification to save for bigger goals, pay credit cards on time or set aside money regularly for retirement or investing.

The Magic of Saving

The payoff of saving is watching your money grow. Remind your kids to keep an eye on their savings. When they get enough coins, let your kids trade them in for bills. When they get five $1 bills, give them a $5 bill, and so on. By making regular deposits, they will see that savings add up.

Make It Official

When your kids have enough money saved, take them to open a savings account at your credit union. Tell them their savings will grow faster and be safer in an interest-bearing account. You could explain that the federal government insures people's money in most banks, credit unions and savings and loans associations for up to $250,000 per account.

Saving Options

Visit your credit union with your kids to find out about the kinds of accounts they can open. Ask about:

Passbook or Statement Account

This basic savings account pays your kids interest. They'll receive their own register or book to record their deposits and track their balance. They can withdraw some or all of their money at any time. A minimum deposit may be required.

Money Market Account

Your kids will earn more interest with this account but have more restrictions. They may need a larger opening deposit and have to keep a higher balance. They can withdraw their money any time, however, and may receive a checkbook with the account.

Certificates of Deposit (CDs)

CDs or timed accounts are beneficial if your kids have a lot of money (e.g. $500 or $1,000) they won't need for a while. They'll earn a relatively high interest rate and won’t be able to withdraw the money without paying a penalty.

SVSCU wants to share tips for teaching children good habits about money management. The information was originally published in Smart Parenting - Money Smart Kids.

You can teach your children how to save money by partnering with SVDCU. Open an account today with a minimum deposit of $10.00. They then become a member of the "Very Important Kid" Club.