September 2008: Teaching Kids to Save
This month’s e-Wealth Coach is Nicolle M. DiPasquale. Nicolle is the Program Coordinator at Family, Career and Community Leaders of America, where she oversees national programs including the organization’s work to educate and encourage youth savings.
"A penny saved is a penny earned,' so the old Ben Franklin saying goes. But to a generation of kids accustomed to wireless, instant feedback, where an iTunes song costs only 99¢, a penny hardly seems worth saving. How do they move past this idea of instant gratification to become financially savvy consumers? Most importantly, how do we teach kids to save?
It Starts at Home
Research shows that young people learn good savings habits from their parents. For parents who have watched children grow up imitating themselves in many ways, that’s probably not a surprise.
In addition to setting an example by practicing good savings habits yourself, here are a few tips to help you get your children started saving:
- Start early. Children of all ages can learn to save, but the results are better when you start young.
- Establish a savings method with your children, which they will use to save. Whether that is a piggy bank at home or a savings account through a bank, help your child create a method that works for your family.
- Have a regular deposit routine. It’s great if your children can save birthday money or the occasional holiday present, but if they learn to regularly save allowance or earned income they will develop a regular habit.
- Encourage your child to pick a goal and set a timeline; short term and low-cost goals are best at first. Reaching the goal will be immensely rewarding.
- Keep it simple.
Though there is no denying the fact that teachers must cover an enormous and increasing amount of material, but financial education must be part of that mix. From budgeting principles to loan rates to the ‘miracle’ of compound interest, classroom lessons are key to teaching and reinforcing smart money management and saving. Click here for more information about FCCLA’s work in classrooms, or here for recommended curriculum.
But furthermore, research shows that it takes more than education to get kids savings, it takes regular practice. That’s why it’s important for community groups and financial institutions to encourage youth saving. Years ago, banks and credit unions had school banking programs where deposits of nickels, dimes and quarters were taken by representatives coming to the school weekly or bi-weekly. These wonderful programs generated many generations of savers. And though that particular practice has ceased, banks and credit unions can still offer ‘youth’ savings account and other products designed for young customers making small deposits. Financial institutions and community groups can also offer incentives like cash rewards, prizes and special interest rates to attract young savers.
Student role models provide a powerful example to their peers that saving money is possible, easy and cool. That’s why FCCLA, like many in-school organizations seeking to educate and influence youngsters, uses the “kids teach kids” method. One FCCLA chapter in Minnesota reached the high-schools’ entire 300 member freshman class with savings presentations, and got commitments from half the class to save.
For a toolkit that can be used for classroom presentations, click here.
From parents to educators to community organizations to peers, there are many avenues that kids should hear about and get help saving. Mostly importantly, try to do your part to help the children in your family and community learn about and start saving, and you will put them on the road to responsible saving and spending habits and financial stability in adulthood.
Nicolle DiPasquale
