Your child is likely learning to add, subtract, and count money in school, and that’s great! But it’s only part of the financial literacy equation. Beyond understanding the numbers, your child needs to learn how to save, spend, and invest their money wisely. Opening a child bank account is a great way to reinforce positive money habits from an early age.
Why start your child on the financial literacy path so soon? It’s the best time! Children are naturally curious, with a strong desire to explore, learn, and discover new things. Teaching them to be smart money now will serve them well as they enter adulthood.
Practice makes perfect, and a child bank account gives youngsters hands-on experience in sound money management. Reinforcing positive money habits now sets them up for future financial success and enriches their lives in many other ways.
Financial Literacy Basics
Give your son or daughter a head start on the path toward financial empowerment by teaching them money concepts at every stage of childhood. The Federal Deposit Insurance Corporation (FDIC) provides free financial education resources for parents, teachers, and caregivers.
Browse the Money Smart for Young People page to access age-appropriate lessons for your child, from pre-kindergarten to high school age. Younger children will start by learning to count money and understanding the difference between needs and wants. They’ll also learn financial literacy basics, like earning, spending, saving, and borrowing.
As they grow older, they’ll progress to more advanced topics like budgeting, investing, and charitable giving. There’s even a lesson dedicated to exploring future career paths. As they near adulthood, they’ll learn about risk management, retirement planning, and homeownership. The lessons also include exercises and resources to reinforce what your child is learning at every stage.
Give your child the opportunity to apply their new skills and knowledge with a youth checking account. Show them how to make deposits, withdrawals, and payments. With guidance and practical experience, your child will have the know-how they need to master the basics of financial literacy.
Positive Life Habits
When you take your child along on shopping trips, they’re likely to see something that catches their eye—a shiny new toy, the latest video game, or the trendy pair of sneakers all their friends are wearing. When you control the money, you decide whether they get the item or not. If you agree to the purchase on the spot, your child experiences instant gratification and learns that simply asking can get them what they want. If you say no, young kids may throw a tantrum, or your teen may become moody.
When your child manages their own money, on the other hand, they learn to take ownership over their financial decisions. They will need to decide if the purchase is something they can afford or worth the cost. They’ll learn to appreciate the value of money and responsible spending.
Once your child is in charge of their own purchases, they’ll be incentivized to earn their own money as well. There are plenty of income opportunities for children of all ages—operating a lemonade stand, mowing lawns, babysitting, completing household chores; the list goes on and on.
If your child wants something they’re unable to afford, encourage them to set a savings goal. For instance, I’ll save X amount of dollars per week until my goal is reached. With a youth savings account, they can watch their money grow and visualize themselves getting closer to their desired purchase. They’ll soon realize that small gains over time can lead to big wins down the line.
Family Activity Time
Make learning about money fun! Turn money talk into an opportunity to bond as a family with books, games, and group activities. For instance, your next bedtime story could be a lesson about money. Check out the Money Monsters storybook series for some good ideas.
The National Credit Union Administration also has interactive learning tools and games to make your money discussions feel like child’s play. For instance, World of Cents is a game that can be played on a smart device. Designed for children ages 5 to 10, kids earn virtual coins as they complete game activities. They can then spend the coins they’ve earned building a magical world. The US Mint features free money games and activities as well, including a lesson on coin circulation.
Money can be more fun when the whole family gets involved. For instance, Capital Credit Union* offers Greenlight, an all-in-one money app for you and your kids.
Assign household chores through the app—your kid gets paid once the task is complete. You have the option of paying a percentage of earnings based on chore progress or only when the full job is finished. Greenlight also has interactive games and hands-on experiences for kids to refine their financial literacy skills.
For instance, they have the option to add savings goals to the app and allocate a portion of their allowance to their savings. Plus, with parental controls, you can establish spending limits, review transactions, and manage financial activities together as a team. With its comprehensive features, the Greenlight app adds up to a very enriching family experience.
Lasting Financial Stability
As you teach your child about financial literacy, you’re sowing the seeds of lasting financial stability. A child bank account with a small opening deposit may not seem like much, but it’s the solid start your child needs to succeed financially.
Take Warren Buffett, for instance. The billionaire financier made his first investment at the age of 11, buying three shares of a single stock. By age 14, he made his first real estate investment. He’s now one of the wealthiest men in the world. Fun fact—Buffett still lives in the Omaha, Nebraska, home he purchased in 1958 for $31,500.
Buffett is a reminder that you’re never too young to start learning about money. When you open a youth checking or savings account for your child, you have the opportunity to guide them through important financial decisions and conversations so they can approach money management wisely and responsibly.
Put your child on the path toward financial empowerment today. A few small moves now could yield big returns sooner than you may think.
*Federally Insured by NCUA. The information provided in this article is general information and is not intended to constitute financial, legal, tax, or other professional advice. Product terms, rates, fees, eligibility requirements, and other conditions may apply. Capital Credit Union does not endorse, recommend, or guarantee any references included in this article. Capital Credit Union is not responsible for the content, accuracy, privacy practices, products, or services, of third-party websites or resources. Readers should review the terms, policies, and information provided by the third parties directly.
