Teaching kids about money management early on is one of the most valuable life skills parents can provide.
Early exposure to concepts like saving, budgeting, and spending helps kids understand the value of a dollar and how to manage it effectively. The foundational life skills help kids develop healthy fiscal habits that will benefit them well into adulthood.
Parents can incorporate healthy practices in several ways, such as giving allowances for household chores, earning good grades, involving children in comparison shopping during grocery trips, and teaching them the difference between wants versus needs. When kids start earning, whether through allowances or a successful weekend at the lemonade stand, parents can introduce tools like a piggy bank, opening a bank account at the local bank, or long-term investment accounts like a 529 to help save for their education.
Money-Saving Techniques for Kids
Teaching kids money-saving techniques is a great way to build their financial confidence. Parents should start by setting clear savings goals and helping children distinguish between short-term and long-term objectives.
Introducing allowances is an effective tool that can begin at an early age. Kids can learn the value of a dollar and understand that money is earned through effort and contribution, fostering a strong work ethic early on. Allowance ideas include completing household chores such as dishes, laundry, cleaning, hauling wood for the wood stove, and mowing the grass, among other things. Once the child is enrolled in school, parents can also reward the child for earning good grades. Â
Visual tools are also a helpful way for parents to engage and teach their children money-saving skills. Parents can introduce the three-jar method for ‘Saving,’ ‘Spending,’ and ‘Giving’ to help kids learn budgeting skills and track their money visually. A hand-drawn savings calendar or chart is also a helpful method.
Last but not least, for parents and children with an entrepreneurial spirit, starting a side job business like running a lemonade stand, walking dogs, or babysitting can provide firsthand experience with opportunities to earn money. In addition to developing a strong work ethic, children can begin to develop financial independence and money-saving techniques.
Starting a Bank Account for Kids
Opening a bank account for kids is a practical way to instill lifelong financial habits. It helps teach savings discipline by encouraging children to set aside money regularly, creating a sense of accomplishment as they watch their balance grow. Additionally, it introduces them to essential banking concepts such as earning interest, making deposits, and understanding withdrawals.
Many local banks, including Grand Marais State Bank and North Shore Federal Credit Union, offer savings account options for children. The accounts, usually targeted at teenagers or younger, aim to instill financial literacy and hands-on banking experience. Parental involvement is required to open an account and is a safe and accessible way for families to incorporate educational lessons into their banking trips.
At the Grand Marais State Bank, children 12 and under can open an account through the Mighty Moose Savers Club program. The account has no minimum balance and no maintenance fees, and children can eagerly watch their interest compound quarterly.
At North Shore Federal Credit Union, youth under 21 can start a youth certificate of deposit (CD) account. The account is tailored to engage and teach kids and teens about long-term saving and earning interest. The credit union requires a $25 minimum investment with terms ranging from 12 to 60 months. For larger investment and banking opportunities, North Shore Federal Credit Union also offers a variety of savings, IRA, Roth IRA, or Roth Conversion IRA options.
For older kids or teens ready to take on more financial responsibility, checking account options are available and provide a practical way to learn about managing day-to-day expenses, tracking spending, and even using a debit card.
Regardless of which method parents choose to incorporate, children can watch their money grow through deposits and small amounts of interest, motivating them to save more and reinforcing healthy fiscal habits into the future.
