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Teaching your child how to save money is one of the most important but daunting challenges a parent can face. Between endless vague articles and the never-ending stream of “helpful” peers, it can be overwhelming trying to find a source of trustworthy information. Knowing where to start can be even harder, which is where we come in!  Below are 5 ways we believe will help your child succeed financially.

1. Educate by example

Having your own personal savings account is the perfect way of setting a good example for your child and one of the easiest ways to go over what you should save for.  Explain to them why you have each kind of savings account and how important each one is, as well as what they can be used for down the road.  If there is an open discussion about savings accounts and the child sees their parent actively using them, they may be more likely to be interested in opening and keeping one themselves.   

2. Teach them the difference between needs and wants

This can be tricky because even some adults do not know the difference, but making sure your child can differentiate between the two is one of the most important steps in saving.  A need is something that is necessary to live and function, like clothing and food.  A want is something that is desired and can change from person to person, something that adds comfort to your life, like a new TV.  However, it is important to realize that wants are only wishes and are not necessary for survival, whereas needs are required for living.

3. Let them earn their own money

When a child realizes the work that goes into earning money, it may give them a sense of accomplishment and can put into perspective why savings is important; however, just allowing your child to make the money is not enough.  You must teach them what to do with their money and the proper balance between savings and spending and comfort them in the knowledge that spending is not bad as long as they have proper savings.

4. Setting budgeting and saving goals

Talking with your children about setting goals for saving and budgeting is the best way to teach them about budgeting and its purpose. It can also show how these two things can positively impact their lives.  For example, if your child wants an expensive toy, then it would be a good idea to take the opportunity to teach them how to save for it.  It is also important to lay a foundation for saving for unforeseen situations.  Teaching them to put away even one dollar every time they get money puts them into the habit of long-term savings as they grow. 

5. Provide a place for them to save

The most important part of teaching your child how to save money is giving them a safe place that makes the idea of saving money special to them.  First Community Credit Union has three savings accounts for youth, and each of them has an interactive component that helps make the child excited to deposit money into their savings account. 

            There is no right way to teach your child about saving money. However, it is important to educate and encourage them to do so! Giving your child the best tools possible when it comes to learning about saving and spending money is very important! This is why we put such an emphasis on saving!