News & Tips
How to Help Kids and Teens Save More Money
From tying their shoes to crossing the street, kids learn a variety of skills from adults, but what about managing money? Kids as early as 3 years old can learn money concepts, and they can start to establish money habits by age 7. No matter what age they are, as a parent or guardian, you have the power to teach them the fundamentals of saving to help shape their financial future.
Saving doesn’t have to be overwhelming. You can start teaching them with baby steps, which will naturally grow into important life lessons. Keep in mind that they learn by example, too! This article will cover a variety of tips to help kids and teens learn practical hands-on ways to build essential money management skills.
10 Ways to Help Kids & Teens Save More
Here are some of the best ways to help teach kids and teens to save. While it may be tough at times to let them make mistakes with money, those errors can be teachable moments along the way!
1. Open a youth savings account.
The first step towards teaching kids the importance of saving usually starts with a piggy bank. After all, they need a place to stash their cash! But piggy banks can’t go to the market and earn interest. At Space Coast Credit Union (SCCU), we offer a Youth Savings account, which becomes a Regular Savings account at age 18. Making deposits regularly for them, no matter how small, will help them grow their savings and earn interest.
If kids receive money, maybe as a birthday or holiday gift, consider involving them in the process of making a deposit at a local branch or with a Mobile Banking app. This will help them feel more excited about saving and will give them a sense of ownership. Start having conversations with them about how saving little by little adds up and can help them buy things they want, such as a bike or a gaming system.
2. Teach them the difference between “needs” and “wants.”
One key principle of budgeting is categorizing disposable (income for expenses) and discretionary spending (income after expenses). Kids can learn to grasp this concept early by learning “needs” versus “wants.” You could quiz them at home to identify items that are necessities (food, clothes) versus extras (toys, candy).
Many kids also love to play store, and you can give them a certain amount of money to spend and teach them how to prioritize needs over wants. Then, as a next step, practice with them at real stores to cultivate mindful spending habits.
3. Open a student checking account with no monthly fees.
A student checking account can help teens learn how to manage their day-to-day expenses. Teens ages 13-17 can open an SCCU Student Checking account with an adult as a co-signer to supervise their transactions and guide them on how to track their account activity. Better yet, they don’t have to worry about any monthly service fees or low balance fees!
Teens with an allowance and/or a part-time job can start depositing the money into the account. Plus, with a direct deposit, they can get paid up to two days early.42 Teens can get a free Visa® debit card with a parent or legal guarantor. A savings best practice you could teach them is to apply the 80/20 rule of saving 20% and spending the other 80%.
See all the benefits of a Student Checking account at SCCU here.
4. Review common fees for checking and savings accounts.
It’s a good idea to have a conversation with your teen about common fees for checking and savings accounts and those for credit cards, such as interest and annual fees. Some common fees include monthly maintenance fees, minimum balance fees, ATM withdrawal fees for using out-of-network ATMs, and overdraft fees. All of these fees can quickly add up! By learning what they are and how to avoid them, they can save more money in the long run.
5. Help them create savings goals.
From shiny toys to trendy clothes, kids of all ages often love pointing out what they want. A savings goal with a final date in mind will help teach them to prioritize how much they save vs. how much they spend on a regular basis. Plus, it’s a good life lesson in learning the value of a dollar. Most of all, once they’ve purchased the item, they’ll feel the satisfaction of buying an item they’ve worked hard to earn!
Junior Achievement Teaches Youth Financial Literacy Skills
Junior Achievement (JA) is a great way for kids to start learning essential financial literacy skills. SCCU supports JA programs, such as JA in a Day and JA Finance Park at local schools. Learn more here.
6. Show them the impact of spending and saving.
If they have a savings account, show them the balance after making deposits or earning interest. Once they have a checking account, they can start tracking their spending and saving more with your oversight. Seeing the numbers in real time can help reinforce the benefits of saving and the impact of spending. Once they’re older, you can help teach them more about making a budget.
7. Introduce them to compound interest & investing.
One of the best ways to introduce a teenager to compound interest is by opening a CD (with them at your side during the application process to discuss how it works). At SCCU, you can open a CD with as little as $500.6 The account will earn interest at regular intervals.
Additionally, you could work with a financial advisor to open a custodial investment account for a child, who can gain access to those funds at age 18 or 21, so it could be their high school or college graduation gift! This account can open a doorway to learning about mutual funds and the stock market. You could also talk to them about the importance of saving for retirement with an IRA or a 401(k).
8. Teach them how to adopt a “thrifty” mindset.
A thrifty mindset can mean making their own gifts for people, learning how to fix household things, looking out for coupons/promotions and seasonal discounts, buying generic products, planning meals, shopping at thrift stores, learning the value of reusable items, and recognizing brand name versus generic item costs. Another tip is to compare items by price per quantity amount—buying in bulk often means saving more money.
9. Open a student credit card.
You may be wondering: How does a student credit card help a teen save more money? Once they’re young adults, they may have difficulty getting a credit card (or one at a good rate) or managing one responsibly. Plus, as a young adult, they need good credit to put down a smaller deposit for an apartment, get a good interest rate for a car loan, and possibly get a good insurance premium.
An SCCU Visa® Student credit card has guardrails in place to help set up teens (ages 15-17) for credit success, such as requiring an adult co-signer and using a deposit as collateral. This will be an opportunity to teach them about the importance of paying the balance in full every month to avoid accruing interest. Additionally, they can learn to use credit cards responsibly with your supervision by buying small planned purchases over impulse buys.
10. Help teens apply for scholarships for higher education.
Hold onto your hat for this one: The average yearly cost of college is more than $38,000 a year. But those with a bachelor’s degree on average earn over $1.2 million more than high school degree holders over their lifetime! To prepare for the rising cost of college, consider opening a 529 Education Savings plan. Saving early and often for college can help offset the need for them to take out student loans.
Once they’re in high school, talk to the guidance counselor about scholarships and any courses they can take that will qualify for college credits. Be sure to explore all financial aid options at various universities, such as grants, work-study programs, etc.
SCCU Makes Saving Easier for Kids & Teens
SCCU offers a variety of banking solutions for youth, such as a Youth Savings account, a Student Checking account, and a Visa Student credit card. Saving not only means making deposits regularly, but also avoiding fees, spending more responsibly, and tapping into additional resources. Your financial guidance today will be an investment in their financial success tomorrow.
Anyone who lives or works in any of these 34 counties can become a member of SCCU with a $5 deposit to a Share Savings account. SCCU offers more than 60+ branches, an extensive network of fee-free ATMs, and 24/7 Online and Mobile Banking. SCCU is federally insured by the NCUA. If you have any questions, feel free to get in touch with us here.
