How to teach kids to save money by age

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According to a recent Greenlight poll, about a third of teens (32%) said the most important financial skill for their future is saving money. “The best way to teach kids of all ages how to manage money is with pocket money,” says Jennifer Seitz, director of educational content at Greenlight, a family finance company with a mission to help parents raise financially smart kids. “Once kids have money to manage, they can begin to understand how to spend it and how to save.”

Read on to see how Seitz, a certified finance teacher and mother of three, suggests teaching children more specifically how to manage money by age.

Age 3-6

“From preschool age, children can learn the basics of money—such as what it is used for, how we make it, and how much it costs. Parents know that the cards we use to buy things aren’t magic money, but kids might not realize it themselves! You can explain that money is not unlimited so there should always be a plan for how it is used. Discuss any money decisions they could understand, e.g. Like picking the best price at the grocery store, or putting money aside for a fun treat instead of something else.”

Age 6-10

“In elementary school, children begin to understand that when you save, you can spend money on something you want or need in the future. And they can start practicing how to do it! Set yourself a savings goal, e.g. B. a new bike and encourage the children to work towards it. This helps them make money a routine and also helps them learn the value of money. As they get older, they can learn about opportunity costs and understand delayed gratification. You will know that sometimes you have to wait for the things you want to buy. Greenlight can help. With Savings Goals in the app, kids can stay focused and motivated while tracking their progress over time. And with Greenlight Savings Reward, kids earn up to 2% on their savings.”

Image: Getty

Age 10-14

“Tweens and teens are ready for budgeting lessons. Half of parents (50%) say the most important financial skill for their children’s future is how to budget and spend wisely. Around middle school, many children are more independent from their parents and spend more on themselves. You’re also likely to make more money, and that provides an opportunity to talk about saving and think about the future. Adults often hear the 50/30/20 budget rule, which is a guideline to spend 50% on needs, 30% on needs, and 20% on savings. For children, these numbers can vary greatly. You’ll likely have more money to spend on wishes… and future savings. Greenlight offers Parent-Paid Interest, which is a great way to educate kids and teens about compound interest. You can set an interest rate of your choice from 1-100% which would grow much faster than a traditional bank account and show the value of higher returns over time.”

Image: Getty

Age 14-18

“Once kids get into high school, they start thinking more about life after graduation and making decisions about college, careers, and financial independence. You may be earning money at an extracurricular or summer job. With more money, they can reap more benefits of saving through investments. 86% of US teenagers are interested in investing, but 45% say they haven’t invested because they don’t feel safe or their parents don’t know how to start. Greenlight’s investment platform empowers kids and teens to use their app to research, explore and learn about the world of investing with expert analysis from Morningstar. With the money they set aside to invest, they can suggest trades that go to a parent for approval. Fractional shares allow investments to be made for as little as $1. Over $10 million has been invested in Greenlight to date. It is a standard brokerage account held in the principal parent’s name, allowing families to invest together with no limitations or restrictions on how or when you can use your investment.”

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