It's never too early to introduce your child to responsible financial habits. If you have a pre-teen or teenaged child, it could be time to start getting them acquainted with how the banking system works. At this age, your son or daughter could have their first job or may start earning a little bit of extra money and there is no better time to help them start saving money than during their formative years.
Positive habits formed early in life are likely to be carried over into adulthood and the same is true for poor spending tendencies. Setting your preteen up with a savings account is the perfect first step towards financial success.
Remember the feeling of independence when you first started earning your own money? Sure, teens aren't completely financially independent, but being able to buy something with money they made themselves is certainly an empowering experience. However, it is fundamental that teenagers learn how important and rewarding it can be to save that money. This is a fight against instant gratification, exchanging it for the long-term advantage of compound interest.
A good way to introduce the idea of a savings account to your young adult is by giving them something to save for. This could give them some motivation to deposit money into savings, and their hard work will be rewarded in the end. A part-time job and lawn mowing for cash after school may not seem that important now, but it's a great time to practice money management in a low-stakes situation. At The Federal Savings Bank, you can open a joint savings account that will enable you to keep an eye on your child's progress.
With a savings account comes the responsibility of knowing when to keep your money in the bank and when to withdraw money. Before advancing to a checking account and a debit card, it's important for adolescents to understand the impact of their choice. Holding and counting physical cash is more impactful than dealing purely in a digital space, so the mere act of having to actually go to the bank and take money out of an account makes a lasting impression.
Most Americans (69%) have less than $1,000 in a savings account, but your offspring do not need to contribute to this reality when they get older. Even if you have struggled with your finances throughout your life, you can set your child up for success by introducing them to the banking system early. If you are unsure how to correctly explain the intricacies of banking and saving to your teenager, a financial professional would be more than willing to offer advice.
Financial literacy and confidence are gifts that will last a lifetime. Learn more on our website today to find out how to get started with a savings account!