Money doesnât grow on trees.
The sooner your kids understand this, the better off theyâll be when it comes to building good savings habits. While many think of savings goals as one-time goals, itâs best practice to think of savings as an ongoing system. Opening an account and letting it sit idle isnât enough; you need a strategy to help your children grow their balance.
HFS FCU is here to help serve as that community resource to help you build positive, consistent savings habits with your children. Read on to learn more or contact HFS FCU today.
Why Allowance Works Well for Building Youth Savings
Giving your children an allowance is a great way to help them build positive savings habits, especially if the money they earn is tied to completing chores or helping out with other things around the house. This way, theyâll have to earn their allowance and wonât get money until the work is done, which can help them understand how money works and build positive saving and spending habits, and learn financial responsibility. Allowance money also presents an ideal opportunity to help your kids learn about saving money, spending wisely, and other basic money concepts.
Setting Up a Simple Split System
One allowance framework for children is the split system, where half of your childâs allowance is for spending and the other half is for savings. This system teaches kids to budget for what they want to buy and allocate their earnings responsibly, rather than spending it all immediately. You can easily deposit any savings into an HFS FCU Kids Club account, and their remaining cash can be kept handy for purchases.
However, consider adjusting the split system based on your childâs age. For instance:
For Younger Children
For younger children, consider putting money into jars or envelopes labeled for savings and spending. Work with your children to track their funds week to week and month to month. For youngsters, this is often best done with visual tracking tools, such as a chart or stickers to help reinforce early money habits.
For Older Children
The older your children get, the more allowance they should have the opportunity to earn. As they earn more, you should also enhance their focus on smart money management. This is where an HFS FCU Kids Club youth savings account can come in handy. A Kids Club youth savings account is designed to help children save and manage their money effectively, and it offers incentives for opening one and continuing to use it. It only takes $5 to open an account, and your childâs account will continue to grow with dividends on their balance until they turn 18.
As children get older, you can also use their youth account to explain how a kids savings account differs from a checking account, high yield savings account, or tools they may use later, such as a debit card.
Making the System Stick
So, how can you make your allowance system stick? Here are a few tips and tricks to follow:
- Stick to a schedule: Whether youâre paying out allowance weekly, bi-weekly or monthly, stick to the same cadence so you and your children can get into a healthy financial habit.
- Be transparent with your kids: Let your kids see their savings balance in their youth account. Seeing their balance and how it has grown can reinforce good savings and spending habits.
- Adjust the split as necessary as your children grow older. Also, increase their allowance as they do more chores around the house so the system stays relevant over time and continues building smart money habits.
Watching Youth Savings Grow
Small, consistent deposits can make a big difference over time. Couple any savings goal with HFS FCUâs current dividend rates for youth savings account balances, and it can really help your children connect to the bigger picture of how savings can increase.
A good savings strategy doesnât try to hit its goals all at once; itâs backed by a strategy. You can adjust it as your children age to align with larger financial milestones and ongoing financial education.
Start or Grow Your Familyâs Kids Club Savings Today
Nowâs the time to take the next step and open a new Kids Club youth savings account for your child. As a partner in helping community members build lifelong savings habits, weâre proud to offer a simple, easy to use savings account to encourage kids to save toward their goals. Contact HFS FCU today to learn more.
FAQs
How much of an allowance should go toward youth savings?
We suggest practicing the split system. That is, allocating half of an allowance payment toward savings and the other half toward spending.
Whatâs the best way to track youth savings for a young child?
We suggest being transparent with your child about their current savings account balance and how itâs grown over time. Watching savings grow over time can be eye-opening for young children. As your children age, discuss interest rates and how APY can complement their savings goals.
Should youth savings be kept in cash or in an account?
The split system encourages a combination of both. Any money allocated for spending is often best kept as cash for children, while money allocated for savings should be kept in a youth savings account.
How can I keep my child motivated to keep saving?
Tracking progress with your child, tying savings to meeting certain goals and celebrating them when they reach their savings goals are all great ways to keep your children engaged and motivated.
What age should kids start putting allowance into youth savings?
While this is subjective, usually the best time is when your child starts grade school. This is especially true if your financial institution organizes school deposit days. Remember, the sooner you start saving, the more interest youâll earn on your balance.
Does a youth savings account earn interest?
Yes, at HFS FCU, our Kids Club youth savings accounts can earn dividends on their balances.
