From Swipe to Savings: Strategies for Financially Educating Kids Today

I find that raising financially savvy kids is harder than it ever was. There are so many factors working against us these days. We do much of our purchasing with credit and debit cards, both of which cause a sort of detachment from the money we’re spending. Your kids may rarely see you use cash, and they certainly don’t often see you writing checks like you used to watch your parents do as they paid the bills each month from the kitchen table. Most people today pay their bills online.
Other purchases are made virtually, without even taking out our wallets. You can buy nearly anything you want on Amazon with the click of a button (and your kids, if they have access to a family device or their own, may have that same luxury). And then there is the ever-expanding purchasing power of our phones. We spend so fluidly, so easily, your children probably don’t even realize that you’re doing it. (Sometimes you probably don’t realize it yourself.)
How can you raise children to be financially savvy in this environment?
- Get started when they're young! By the time they're seven, they've already picked up a bunch of habits about money. The University of Cambridge found that by then, most kids know money can buy things and get how you have to earn it. Plus, they can understand things, like planning, waiting before deciding or buying something, and knowing that some choices can't be undone. At IAACU, we offer the Kids Club, a savings account with incentive with play money to buy toys in our lobby.
- Consider giving your kids an allowance—it's like a regular amount of money they get each week. It's a great way for them to learn how to handle money. But here's the trick: along with the allowance, tell them there are some things you won't pay for anymore. When they're little, it might be the candy at the store. You can start with $1 a week for each year of their age. As they get older, you stop covering more things, like concert tickets or snacks from vending machines. As their allowance grows, they learn to decide what's important to spend their money on. This teaches them to prioritize their spending. When your child is old enough to handle the responsibility of a debit card, our Dollars & Sense Checking is the perfect option.
- Make saving a game! Start by saying, "Save 10% of your money." If they do this their whole lives, they'll be great at adult stuff like retirement. But, saving $100 when you only get $5 a week is tough. So, here's an idea: create a family savings plan where you add money when they save. It's like teamwork to reach their goals faster. The important thing is for them to see saving as not easy but completely worth it, even if it means you chip in a bit. Our club account would be a great solution to build savings quickly and offer a higher rate than a standard savings account.
- Encourage your teenagers to get jobs. The money they earn themselves is way more special than what you give them. They'll spend their allowance quickly, but the cash they earn from mowing the lawn for the neighbor will stick around longer. Once they start working, they'll realize that the money they get is connected to the time they put in. They might even start saving on their own without you having to remind them. Opening a checking account like Dollars & Sense will help when your teen gets their first check or payment.
- Don't rescue them. It might seem simpler to give them some of your money when they've spent all of theirs, to avoid an argument. But by doing that, you're missing out on teaching them a crucial lesson: Once the money is gone, it's gone.