This content was originally featured in the Putnam County Examiner
April 22 marks National Teach Children to Save Day, a “holiday” I’d advocate more Putnam County families learn about. As a mother of two children, ages 11 and 14, as well as a banking professional, I know the reasons it’s called out on the calendar and the importance of talking about financial literacy sooner rather than later.
While the approach may vary from family-to-family, below are a few short tips that have worked for my own family.
Go small, think big
As children get older, opt for smaller presents and more monetary ones and talk with your own family and extended family as a rule of gift giving. These open-ended gifts allow children to make choices and reduce a glut of toys, gadgets and gizmos.
Let them see savings
From an early age, my kids have had bank accounts. They got to see their own savings statements and “see” how their savings have grown since they were little.
My husband and I have financial conversations in front of the children – not the heavy talks, as these are best left to adults – but ones that allow me to show them how I write a check to pay my bill, or how I log onto the internet to see my account balances, this way the concept is not new to them.
Put credit cards into the convos
Talk about why credit cards are borrowed money and that they need to be paid every month. Discuss interest and the real costs of commitments deferred, as well as impulse buying.
Introduce the 30/30/40 rule
When monetary gifts are received or a child receives payment for a job done, such as yard work or babysitting, teach them the 30/30/40 rule. For example, if they get $100, ask them to: save $30 for future needs - such as getting a friend a gift (this also helps to teach them to ask critical questions such as, “Do I really want to spend this much on junk?” or “Is it worth it?”); put $30 towards future college tuition (this gets given to me and put it into their 529 / savings account); and keep $40 to spend on whatever they wish or hold onto for a fun day.
Familiarize the kids and family members with a 529 college savings plan
Have the kids ask for a small gift and request that grandparents contribute to their 529 plan instead of buying all the latest must-have gifts.
Let them redeem bottles for recycling and keep the change they get back.
Play a game
Teach them with Monopoly money what things cost. Give them a budgeted amount of Monopoly money and have them put a tag on things in their room what they THINK the item would cost. Then have the kids go “shopping” in their room to see the things that they would want to buy, and explain why those purchases make sense.
Do the math
When my daughter wants to go clothes shopping, there is a set dollar amount given for her to spend and we look at the price tags together. This practice helps her with her math (calculating percentages off) and allows her to see the dollar savings and consider if that outfit is really worth the cost.
Bring it into the real world
When dining out in a restaurant, my son loves to try new foods, and we have him look at the difference between ordering many little items instead of a meal that may come with a soup or salad (and bonus for him if it includes dessert!). This helps him to make better choices and reduce impulse ordering.
Mainly, it’s never too early to help youngsters gain a better understanding of saving for the future and of healthy ways to spend, save and enjoy money. Habits formed now will stay with them into adulthood.
Sue Musumeci is a Carmel, NY resident and branch manager, vice president at Tompkins Mahopac Bank’s Mahopac Falls and Southeast locations.