Part of your job as a parent is to prepare your kids for the future. One important component of their future is learning how to handle money. Yes, financial literacy can seem daunting and complex, but you can start small by introducing your young kids to simple concepts like saving money in an online savings account. Here is a guide to help you start talking about finances with your kids:
Younger than six
If your little one is less than six years old, they may not understand what an online banking account is even if they are tech savvy like many kids today. But, they will understand a physical representation of their saving efforts, aka the traditional piggy bank, according to Spencer Tierney of NerdWallet. You can even let them pick out the bank — it doesn’t even have to be a pig! They will love dropping the coins or dollars they receive from birthdays, holidays, or completing age-appropriate chores. Plus, they will be able to see their savings grow until you allow them to buy something special for themselves at the store.
Ready for the next step
Once the piggy-bank-savings method has lost its appeal or your child’s interest, it could be a good time to go high tech. Online savings offers 24/7 access, so you can set the time that’s convenient for you and your child to discuss money. No need to wait in a crowded lobby or deal with an appointment time that puts stress on your schedule and your kid’s nerves.
Most likely, the financial institution you trust with your grown-up money offers a kid-friendly savings account. If not, a little research should help you find a suitable source for your child’s hard-earned money. “Whether you want to help build your child’s balance or your child needs an account to bank their income from an allowance or part-time job, a youth savings account provides an opportunity to earn some interest, while also learning how to bank and build a savings habit,” explains Sabrina Karl, writer for Investopedia.
What to look for in an online savings account
The interest rate isn’t the only thing you should weigh when choosing an online savings account for your child. Although, a high-interest rate is an attractive feature and may inspire your child to save as much as possible! Check to make sure that the high-interest bearing account does not require monthly maintenance fees or a minimum balance before committing. “Children should see saving as a good thing and not have fees diminish what they put into their accounts,” Tierney says.
Kids have limited attention spans. To keep their focus on their money-saving habits and make your lessons enjoyable and fruitful, you should choose an online savings account that is easy to use, see, and access. Tierney suggests looking for features like mobile apps and electronic statements; other features worth noting are goal-oriented budgets, spending trackers, and a prepaid debit card. “Show your child how to create their own secure password, which will help them learn money management and internet safety,” he advises.
According to Margarette Burnette of NerdWallet, some apps will offer parental controls so you can help monitor how much your child spends as well as let you transfer money directly into their account.
By talking to your children about money, saving, and accounts early, you’ll inspire them to make smart money moves throughout their lives.