There are a lot of different savings levels for children as you probably are aware. Depending on your child’s age, “savings” can mean a lot of different things. So, I decided to put together a children’s savings road map to help guide parents (and children) when learning the importance of saving money.
Piggy Bank Savers
Starting as early as age 4 or 5 you can begin educating your children about savings. Start this phase off by purchasing your child’s first piggy bank and help them save for candy or a small toy from a discount dollar store. Kids don’t have to be earning an allowance at this stage. Mom and dad can just offer them a little bit of spending money each week to allocate towards their savings goal.
Savings Account Savers
As this stage your child is a little bit older and can grasp the concept of earning or receiving an allowance for doing jobs around the house. Saving in a piggy bank can still work great for these youngsters but you might be able to start them with an online kids savings account such as the ING for Kids savings account. The savings goal obviously increases in this phase as well. Consider helping your child learn to save for a larger toy, or even a fun-filled entertainment event with a friend such as bowling.
You’re child is probably in the teenager years and the savings goals should reflect larger items that require more responsibility. Do they want to go on that special trip with their church or high school? Well, they’re certainly going to need a savings goal, aren’t they? Mom and dad can help with a match, but children need to do their part too. This phase can also mean saving for a down payment for a car which many teenagers would love to have when they are of the proper age.
Saving for College
Phase 4 is saving for an even larger goal such as college. Phase 4 savers are contributing a part of their part-time paychecks to this goal and are doing their part to help earn their way to a college degree. This type of savings doesn’t necessarily replace the saving that parents can do with a college savings plan, or educational savings account, but can be in addition to these tools. Children might continue to use their ING Kid’s Savings account to save for college expenses such as tuition, room and board and food.
Saving while in College
Finally, a phase 5 saver is a child in college that is saving, but perhaps for future savings goals after graduating. This saver is for children who are a year or two into college and have settled in well. They may have a part-time job while attending school. These types of savings goals may include building an emergency savings account, saving for work related expenses, such as clothes, or even for apartment or housing after school. A phase 5 saver has the present under control and the future in mind. This phase is only possible when a child has learned the importance of saving and done their part in phases 1 – 4.
Hopefully, this article helps create a clearer picture in your mind of a path towards savings for your children. It’s your job to educate them on the importance of savings and why they need to prepare for their future as young adults. Each phase also provides a great opportunity to help children learn to manage their money wisely so they can have enough to contribute towards savings.
What do you think about this children’s savings road map?