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Saving is for Babies

As a parent, you strive to teach your child life’s most important lessons. Always say please and thank you, treat others the way you want to be treated and never talk to strangers. But have you started educating your child about financial responsibility?

No. You don’t need to analyze the latest stock market trends over a bowl of Cheerios. But it’s never too early to introduce simple money concepts to help your little one grow into a fiscally responsible adult. It’s important to teach children the ways of money, starting around age 2. Here are tips to get you started.

Money Talks: First and foremost, talk to your kids about money. “We found that parents played a really big role in the kinds of behaviors that their children exhibited,” says Joyce Serido, a researcher at the University of Arizona at Tucson. According to Serido’s research, young people who reported their families had included them in conversations about money and budgets were much more likely to make responsible financial decisions throughout college. So start talking about money as soon as your youngster is old enough to understand. Just keep it age appropriate. For example, explain to your preschooler how you use the green stuff to pay for the groceries. By high school, start including him in discussions about what kind of summer vacation the family can afford.

Set Goals: Teach your children how to set financial goals and work toward them. Once little ones learn to count, tally up the coins in their piggy banks and discuss how much they need to buy that special toy. As they continue to save, praise them for their progress and for sticking with it.

When children reach age 9 or 10, they are probably ready to save for larger purchases, such as an iPad or a new bike. If that is the case, it may be time to open a savings account. Children can deposit birthday money, their allowance and graduation gifts. Remind children of their goals and encourage them to always save at least some of any money they receive.

Pique Their Interest in Interest: By age 13, start discussing long-term saving goals and introduce the concept of compound interest. (The sooner you start saving the faster your money will grow.) It’s important to discuss actual numbers to help your adolescent grasp this concept. Say for example, if you set aside $100 annually starting at age 14, you’ll have $23,000 by age 65. Encourage your teen to play with the numbers on an online savings calculator, like the one at This will illustrate exactly how much money can be earned when saving a certain amount at a specific interest rate.


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