According to a study at the University of Michigan Center for Human Growth and Development, children as young as five have already begun developing emotional reactions to spending and saving money. The study also found children’s emotional reactions translated into real-life spending behavior, and early spending behavior might indicate poor financial decisions later. All of this highlights the importance of early education to get kids on the right financial track.

So where can kids learn about the merits of saving and setting goals and the relationship between work and earning money? In most schools, personal finance isn’t part of the curriculum, which means it’s up to parents and guardians to impart these important lessons.

Fortunately, local credit unions, like Members First Credit Union of Florida, have helpful youth saving programs that can help teach kids as young as pre-school age about money. Many youth programs come with fun perks like a gift for opening an account, prizes for making deposits or reaching saving goals, and the ability to have allowance direct deposited into their account. In addition to these benefits, here’s what else opening a youth saving (or checking) account can do for kids:

Teach about goals. Setting, working toward, and achieving goals is a crucial life skill and one that serves us throughout life. Through goal setting, kids learn about hard work and delayed gratification. Saving money for the goal of being able to afford something like a new toy is a very tangible, concrete way to work on these skills and lessons.

Begin teaching financial basics. Saving for a financial goal also instructs kids about the basics of income, expenses, and value. If a child begins saving for something but quickly sees how much work and time it will take to earn and save enough money to purchase the item, they might rethink their goal, teaching them to think critically about what to spend money on and if it’s worth the price (i.e. a wise purchase). This is an important lesson in an age when many kids more often observe adults using credit cards to obtain goods and services and don’t see an obvious exchange of money for those goods and services.

Teach responsibility. A saving account that directly reflects a child’s contributions and savings as well as withdrawals will help teach responsibility for actions and the correlation between decisions and consequences. If they don’t regularly contribute to their saving account and resist spending, they will never reach their saving goal! This is also a chance for children to feel pride, accomplishment, and empowerment when they reach their saving goal—and associating those positive feelings with saving will help reinforce this habit.

Teach the value of investing. Investing and interest can be difficult concepts to teach—so why not show it at work on a saving account! With a youth saving account and online access to account balances, kids can see how they earn interest by having money in different kinds of saving accounts—the more money they have saved, the more interest they earn. Having a saving account also shows how saving early and regularly grows money and how even small amounts can add up—both when saving and spending.

Teach compassion and perspective. Using a saving (or checking) account to save money, watch it grow, and use it to buy things shows kids how financial resources are tied to what people have and don’t have, what they can afford and what they can’t. Kids can begin to understand that the things they and their family own are the result of planning, choices, and work. Not only can this lead to more thoughtful decisions regarding their own spending choices, but it can also lead to a more compassionate view of others when they understand why someone can’t simply buy what they want or need whenever they want. 

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