Young Americans

Toddlers to teens: How to kick-start your child’s saving habits

coins, a dollar bill and a checkbook

Getting your children to save money may be more difficult than getting them to brush their teeth or eat their vegetables. But it’s one of many good money habits you can help your kids build. Read on to learn how you can develop a savings mindset from early childhood to young adulthood.

Early childhood

“Are we there yet?”

With young children, learning to wait is essential to good savings habits. Focus on developing behaviors that require patience such as playing quietly when you’re on the phone or talking with others, waiting for their turn in a game, or standing in line at a restaurant. Learning these skills makes it easier for them to wait for things they need or want as they get older. Reward your children with praise for patience and self-control; these practices help them to see how exercising patience now pays off later with better results. Read more about how learning self-control helps a child’s financial future too.

Middle childhood

“OH! I want what those kids have!”

Kids age six to 12 begin to notice what’s around them—like what their peers and friends have. Talk to them about how people usually save up for things they want. Help them plan and save money they might receive as gifts or allowances. To encourage their savings, you might introduce them to the idea of “matching” – even though they might not encounter a matched savings program for many years. You can add to the money they deposit in their bank accounts or put in their piggy banks—such as five, ten, or 25 cents for every dollar they save—and set a limit on the total amount you match per week or month.

Today’s children are digital natives, meaning they have been born into a world full of technology and it feels natural to them. You can demonstrate how technology supports the world of money, too. For children who are too young to have an account in their own name, consider opening a separate, low-fee savings or checking account where you keep your child’s money. Then, show them online how the account can grow. You can also help your child make digital deposits, or pay their allowance by transferring money from your account to the one you hold for them.

Teen years and young adulthood

“Can I borrow ten dollars?”

As your children attend high school, move on to young adulthood, and begin to earn their own money, help them set savings goals and track their savings.

Your teenagers are entering a time where they’ll be called on to make complex choices and tradeoffs. Help them get in the habit of gathering and comparing facts before making a decision. You can talk through with them the advantages and disadvantages of having a savings account, checking account, checkbook, debit card, and other ways to track and save their money. Help them comparison-shop for an account with features that are important to them: low risk, low fees, online access, and more.

Building a money habit like saving for the future happens over time. As your children grow and develop, you can add to the foundation of money skills they carry with them into adulthood.

Try out activities with your children

On our newly redesigned web resource, Money as You Grow, you will find activities designed for each age group to help prepare your children for their financial lives. We’ve also combined the activities with our research on how adults develop financial well-being to show you why the activities work. Let us know what you think!

This post was originally published on the Consumer Finance Protection Bureau's blog. Link: Author: Laura Schlachtmeyer

Read more here.

Take a tour of Money as You Grow! Our new resource to help parents and caregivers give children a strong financial start

Money as You Grow graphic: a piggy bank and a wallet with coins and bills

As a parent or caregiver, you try to find the best way to prepare your children for their financial lives. Money can be a complicated topic, and knowing what’s best for your child based on age can be difficult. Even though schools, banks, and other institutions offer activities, websites, and apps, it’s not always easy to tell whether these are age-appropriate for your child or teenager.

To help parents and caregivers, we’re launching a newly redesigned web resource, Money as You Grow.

On Money as You Grow, you will find activities designed for each age group, from children as young as three years old to teenagers and young adults. What’s more, we’ve combined the Money as You Grow activities with our own research on how adults develop financial well-being, to show you why the activities can work. Once you’re equipped with this knowledge, you’ll be able to apply it to many everyday activities and games that you and your child or teenager may enjoy.

By exploring Money As You Grow, you’ll see how early childhood is the time to acquire skills like self-control and planning ahead, how middle childhood is about getting familiar with the financial world around us, and how teenagers and young adults can practice financial skills that drive their choices in adulthood.

Introducing: A new home for

On this new resource, you’ll see activities from the acclaimed Money as You Grow website. Money as You Grow was created in 2010 as an outcome of the President’s Advisory Council on Financial Capability, which was formed “to assist the American people in understanding financial matters and making informed financial decisions.” Money as You Grow was recommended as an initiative by the council, chaired by John W. Rogers and vice-chaired by Amy Rosen, and it was then developed by Beth Kobliner, chair of the Council’s Money as You Grow working group. We’re pleased the CFPB is the new home for Money as You Grow.

Ready to get started? Visit Money as You Grow and start exploring!

This post was originally published on the Consumer Finance Protection Bureau's blog. Link: Author: Laura Schlachtmeyer

Read more here.

The right shoes and common sense can help your preteen gain financial ground

New students should look closely at college-sponsored bank accounts and shop around

When children are young, they can learn self-control and how to plan ahead, which are skills needed for a strong financial foundation. As your child grows older, he or she will probably be increasingly exposed to advertising and peer influences. This makes a parent’s role essential in developing financial habits.

According to research we commissioned, “during elementary and middle school, children … start to become aware of different brands and make judgments about people based on the particular things they consume, suggesting that the early elementary grades may be a developmentally appropriate time to teach children to resist consumer culture.”

We recently heard stories from parents that reinforce what our research shows: The preteen years are critical for developing an internal compass for what’s important and what’s not. Here are some examples of how children can learn important lessons from parents – even if they are just shopping for shoes.

The 9-year-old who wanted a $100 pair of brand-name shoes

The father of nine-year-old Jen shared this story : “Last year when we were shopping, Jen was adamant about getting a specific brand of shoes. I didn’t want to pay $100 for a pair of shoes that would be too small in a few months, so I asked her some questions. It turns out she just wanted a pair of high tops ($25) that her friends had, not specifically brand-name shoes. There’s that dynamic where they’re influenced by advertising or peers.”

More and more, preteens are exposed to advertising and peer pressure. Parents can help by instilling values like frugality, thinking twice, and staying away from temptations. By asking a few questions, Jen’s father was able to figure out that the brand name wasn’t important to his daughter, which helped his daughter absorb an important lesson about value. Instead of just buying on impulse, Jen learned to take a step back and ask herself what she really wanted.

The 11-year-old who got teased about her shoes

Another sneaker story comes from the parents of Tina , an eleven-year-old: “Tina got a pair of sneakers for the holidays. But when Tina wore them to school, her classmates teased her for not having the ‘latest’ brand, after she claimed she did. My daughter felt bad and didn’t want to wear the sneakers anymore. We sat down with Tina and did a little online scouting into sneaker fashions. It turns out that Tina’s sneakers weren’t the most expensive brand, but they were definitely one of the ‘latest’ versions of the sneaker.”

So Tina went back to school in her sneakers armed with the information they had found, and proud to tell her classmates that her sneakers were just fine. With a timely intervention from her parents, Tina learned a valuable lesson about peer influence.

Preteens pick up self-control and habits from parents and caregivers

During the preteen years, developmentally, it’s a little early for children to handle their own money decisions. Instead, it’s a great time for parents to intervene at key situations to talk about financial common sense. By encouraging preteens to ask themselves what they really want, or showing them how to do research to find facts, parents can help preteens create an internal yardstick to help them make their own decisions as they grow into adulthood. Being able to make decisions that make the most sense for them as individuals – and not just buying the trendiest thing even if it’s just about shoes, is a skill that will serve them well throughout their financial lives.

Check out more resources and research

For more ideas on teaching your kids about money, check out our resources for parents.

Read a more detailed report we commissioned about the stages of development for children’s financial knowledge, attitudes, and skills.

Have a young child? Review our blog for building nonfinancial skills to help your child’s financial development.

Stay tuned for our next blog about how teenagers can benefit from experience-based and practical education programs. As your child gets older, parents and other adults who are constant in a child’s life remain influential.

The names in this blog have been changed to protect the privacy of those involved.

This post was originally published on the Consumer Finance Protection Bureau's blog. Link: Author: Laura Schlachtmeyer

When your child learns self-control, it helps their financial future too

New students should look closely at college-sponsored bank accounts and shop around

The childhood years are an important time to learn about money. But money is an abstract concept. Even before young children’s brains are ready for the idea of money, they can start getting on track for a solid financial future.

Young children can develop abilities such as self-control, planning ahead, and creative problem-solving. These might not seem like financial skills, but they are helpful in building a financial foundation.

Good things come to those who wait

Cookie Monster, the Sesame Street Muppet with a constant hunger for cookies, is teaching kids about self-control. Watch this video of him resisting his favorite treat, and afterwards, try talking with your children about times they’ve had to wait for something they wanted. A study shows preschool children who viewed the Cookie Monster video were able to wait four minutes longer for a snack than children who did not.

What’s the connection between cookies and personal finance? In the first five years of life, children go through rapid neurological growth and can quickly expand key abilities such as self-regulation and planning for the future. As your children grow older, they’ll need these skills and abilities (known in child development as “executive function”) when they make more complicated decisions about making plans or budgets.

As a parent, you are the most powerful influence on your children’s financial lives. We spoke with Cathy, a young mother, and were inspired by her story that shows how young children can develop executive function skills.

The 3-year-old party planner

“My son was very excited about celebrating his third birthday with a special treat with all his friends at daycare. I asked him what kind of fruit he wanted to serve for his treat, and he enjoyed planning the menu of peaches and blackberries. We went to the grocery store together and got the fruit a couple of days in advance.

The next morning when I offered him a peach with his breakfast, he said, ‘No, Mama. We can’t eat that because it’s for my birthday party.’ He knew what the payoff of saving the peach would be, and how that fit into the plan for his party. And having the party just like he planned it was really motivating and important – that idea was more exciting than eating one of his favorite foods. I was really proud of him, and feel like this skill of planning for something he cares about, and sticking to the plan, will serve him well in life.”

Saving a treat for a special occasion might not seem like a money decision, in the traditional sense. But Cathy’s son had absorbed a meaningful lesson that can serve him well as an adult—about how patience can be rewarded. Parents can look for chances to present their children similar opportunities, so that they practice self-restraint and delaying gratification.

Ideas for enhancing skills to support good financial decision making

See a guide of activities you can engage in with your child, from infancy to adolescence, to enhance executive function skills that provide the groundwork for good financial decisions. When you read to your child, try keeping the story going, by playing the roles of different characters—staying “in character” helps children focus attention and practice holding multiple ideas in mind at once.

For more ideas on building your kids’ financial lives, check out our resources for parents.

Read a more detailed study we commissioned about the stages of development for children’s financial knowledge, attitudes, and skills.

Stay tuned for part two of our three-part blog series about the role of parents as their children grow older. As your child starts their preteen years, they’ll be exposed to more influences from peers and advertising. If you are a parent or caregiver, you can help steer your children through the next phase of their financial development.

The first name in this blog has been changed to protect the privacy of those involved.

This post was originally published on the Consumer Finance Protection Bureau's blog. Link: Author: Laura Schlachtmeyer