Teach Children of All Ages to Save
Ages 3-6: Make it visible.
Sometimes a simple action such as putting change in a clear jar can help teach youngsters some important lessons. By encouraging kids to keep adding change to the jar, they get to watch it grow over time. Explain that at the end of each month, you'll count the change together and then buy something as a reward. Always leave some change in the jar (say 10 percent of the total) to start off the next month. As the children get older, teach them about budgeting and splitting the change up into separate jars marked for saving, spending and sharing. This way, children begin to get a sense of the importance of managing their money in ways that are beneficial to them and to others.
Ages 6-8: Earn it.
Encourage kids to collect and return recyclables or check under the couch cushions for coins when they help you tidy up at home. They can even help sort the laundry and keep any loose change left in the pockets. These activities help put extra coins in their jar and introduce the concept that you can earn money by helping others. Explain that lots of adults have "service" jobs, much like the chores kids do at home. It's an important part of America's economy. Doing a job well now is good training for later -- when they might train others or even start their own service-oriented business.
Ages 8-12: Put your money to work.
Get these increasingly sophisticated "tweens" interested in saving by explaining how money grows through earning interest. Involve your bank by requesting a tour and opening a savings account. Encourage regular deposits to help children strengthen their savings habit -- perhaps each time you deposit your paycheck. An added bonus to money in the bank: In addition to earning interest, it's a bit less accessible for impulse spending, and it's protected against loss by FDIC insurance -- something that can't be said of piggy banks at home. Contact your banker to find out about special programs they might offer for children.
Teens: Prepare for the future.
The teenage years often are the time to open a first checking account at a bank, with a parent or guardian as a custodian. It's important for teens to know the proper way to write a check, how the check register works and how to use an ATM or debit card. Explain that a debit card works like an automatic withdrawal of funds from the checking account, even though it appears to work like a credit card. Instruct teens in good checkbook-balancing habits -- make sure they write down all transactions, including debit card purchases, ATM withdrawals and any automatic bill payments. Encourage them to balance checkbooks at least once a month. Suggest keeping bank statements in a three-ring binder or other filing system. If the bank offers online banking, go over the advantages of monitoring account balances more frequently and keeping an eye out for unauthorized transactions. Also, share the joy of compound interest by teaching teens the "rule of 72." Simply divide the interest rate they earn into 72 to figure out the number of years it will take to double their money.