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Autumn marks the return to school for families with students of all ages, and along with adjusting to a new academic year, everyone is readjusting to a sense of routine. As habits are formed this fall, it’s a great time to add one more to the regimen: a savings habit.
It’s never too early to instill sound financial practices and begin building a solid foundation for managing money in the years ahead. After all, financial literacy is increasingly being viewed as an important component of a child’s education. As you prepare your students for a successful school year, consider adopting some of these strategies to set them up for financial success, too.
1. Start conversations about money early
Introducing kids to financial concepts doesn’t need to be complicated. Daily activities offer ample opportunity for age-appropriate lessons. You might note how the morning carpool helps families save on gas and money. A trip to the library can launch a discussion about borrowing and the importance of returning items to avoid fees. And special occasions, such as birthdays and holidays, could result in cash windfalls that prompt a discussion about setting aside a portion of funds for a rainy day.
By focusing on clear concepts — earning, borrowing, spending and saving — one at a time, you can gradually build your child’s grasp of financial basics.
2. Open savings and spending accounts
To help students manage their money, set them up with saving and spending accounts at your local or community bank. Some financial institutions will waive fees and minimums for minors. First Interstate Bank, for instance, offers a regular savings account and a basic checking account that waive minimum balance requirements for those under 24.
A savings account offers interest that provides added incentive with a chance for a child’s money to grow. Pairing it with a checking account that comes with a debit card and ATM access helps kids take responsibility for their spending.
3. Create opportunities to earn and spend
While it’s important to build savings, it’s also important to manage expectations when it comes to wants and needs. If children are asking for something like a new toy or video game, note the price tag and offer up ways to earn money to help raise the funds for the purchase.
As students grow, so will their needs, whether it’s transportation to get to a first job or tuition to attend college. Create small, achievable financial goals to get them on the path to earning and saving. If your budget allows, consider offering to match their savings as added incentive.
4. Establish a budget
As young adults take on after-school and holiday jobs, they may start spending their earnings before even seeing their first paychecks. This is a good time to introduce the concept of taxes and how take-home pay is a net, not gross, amount. It’s also a good time to talk about budgets and to get kids thinking about how much they want to set aside for future needs and how much is available to spend now.
Start including your students in your own budget development, such as for weekly groceries, holiday gift shopping or an upcoming family vacation. Be open about changing circumstances and budget impacts. For instance, if you’re among those who will resume federal student loan payments this fall, consider sharing how you’re making room for those payments.
5. Demonstrate the value of credit
Finally, while it’s important to live within means, borrowing may be necessary for some big purchases, such as a college education, a car or a home. Using credit responsibly for smaller purchases can help bring those larger ticket items within reach. Discuss paying credit card and other bills on time and in full to avoid interest charges to establish a strong credit history.
By speaking openly about money matters and involving children in some budgeting and decision-making for your household, you can introduce young people to financial basics that will serve them well throughout their lifetimes. For more information on financial topics, visit First Interstate’s online Resource Center or stop in at a local branch to learn how your students can start saving for their futures.