For many people who think about being prepared for the future, savings are a fixed expense that is built into the monthly budget, just like car payments and insurance. For most people, though, this habit does not come naturally but needs to be acquired and practiced.
Having candid conversations with your kids can help teach them those saving smarts now, when they’re young, to help make it a lifetime habit they’ve already mastered by the time they hit their 20s.
We’ve compiled some starting points to help start a conversation and give your kids a clear understanding of why saving is crucial to financial wellness and how to make it happen.
Points to Cover:
- Why putting money aside each month is important
- How interest and compound interest work
- The difference between long-term and short-term saving
- Reasons to save
Conversation Starters for kids Under Age 9:
- Let’s say you’ve only got $15 and you want to buy a drone that costs $65. You get $5 a week as your allowance. How can you buy that drone?
- Your child needs to save $50 more to buy that drone. How do they normally spend their allowance? Do they put some away to save, then spend the rest on small treats or items?
If they save their whole allowance for ten weeks, they will have the $65 needed to buy the drone. If they want to continue spending some of their allowance on smaller items, then they will have to wait longer to be able to afford the drone.
- Your child needs to save $50 more to buy that drone. How do they normally spend their allowance? Do they put some away to save, then spend the rest on small treats or items?
- Can you think of some things that Mom or Dad saves up for?
- This could be a new car, family vacation, holidays, retirement, etc. – there is no right or wrong answer.
- If you earn $0.10 for every dollar you save, how much money will you earn by putting away $5?
- This question is a great way to show how interest and compound interest work. In the example of $0.10 for every dollar saved, you would earn $0.50 by putting away $5. When you let your savings and don’t spend it, over time you earn even more money.
Conversation Starters for Kids Over Age 9:
Are you saving up for anything important?
Can you think of some things that Mom or Dad saves up for?
- Have you ever had to pay for something unexpected? How did you come up with the money?
- This is a great time to talk about saving for an emergency fund. Putting money aside regularly will set you up to be a better position when you encounter problems down the road (i.e. car repairs, job loss, etc.).
- Some things we save for are short-term goals, and others are long-term goals. Can you name some of each kind of goal? How will we save differently for each kind?
- A short-term savings goal is achievable over a shorter amount of time, one to two years or less. This could be building an emergency fund, paying down debt or saving for a vacation.
- A long-term goal will take longer to achieve and might include a recurring payment once you reach it. Examples might be buying a car or home or saving for retirement.
- Do you think it’s smart for Mom and Dad to keep money they’re saving under the mattress? Why or why not?
- Some may say “Cash is King,” but hear us out… keeping your money at a bank or credit union protects you from theft and gives you the opportunity to earn interest.
Northern’s Smart S.T.A.R.T. (Savings Today Are Rewards Tomorrow) ® Savings Account provides a fun way for children, up to age 12, to practice these lifelong skills. Through our partnership with Zoo New York at Thompson Park, we’re able to provide our youngest members rewards sure to drive them WILD, including complimentary birthday passes to the zoo, giveaways throughout the year to include seasonal celebrations, a special toy each time they make a minimum monthly $5 deposit, and more! Bring your child to the relationship center closest to you and open a Smart S.T.A.R.T. Savings Account today!