Financial Savviness Starts From an Early Age
November 14, 2023
Ask any parent what they hope for their children when they grow up and they will likely include a desire for them to “be happy.” While the concept of happiness can vary widely, there are numerous studies that do link financial independence to increased level of happiness, mainly due to the alleviation of stress that financial insecurity carries with it. In fact, financial independence allows people to more freely live their lives without the constant concern of making financial ends, which as a result, can also improve general quality of life and mental health.
Learning to manage and save money can be hard, and the best way to learn is to start practicing early and often. An easy way to practice money management from an early age is by providing your kids with an allowance. By giving kids a small payment every week or month, they can start to understand the costs of the items they want to buy and the work associated with getting them. Along with an allowance is a great time to begin teaching budgeting skills. We love the Spend, Save, Give method, which places their money every time they earn an allowance into three jars:
- A Spend jar for items they want to purchase
- A Save jar for money they want to set aside, for a larger purchase, for something they want eventually or just to watch their savings jar grow
- A Give jar for donations to help others
With Amboy Bank’s partnership with FamZoo, you can automate the best practices for this method:
- Pick a day of the week or month to automatically transfer allowance money from your parent account to your child’s FamZoo account. Say goodbye to setting reminders for account transfers.
- Dictate how much money you’d like to give your child(ren) per week, month, or per chore right in FamZoo.
- Choose how to split the allowance. A good rule of thumb is to dedicate 10% in Give, 20% Save and 70% Spend.
- Give your child an additional savings incentive by paying interest on their Savings account.
By taking advantage of the online ease and navigability that today’s kids possess, we can start to introduce and implement financial responsibility, understanding and confidence through things like family friendly apps. Automatically setting aside a portion or percentage towards charitable giving and saving before their spending allocations are used up can demonstrate the power of examining how they spend and create healthy habits for the future. Parents can keep an open dialogue with their kids to find the best fit depending on their specific circumstances while kids are empowered with decision making and learning to make more financially independent decisions.
By taking advantage of the resources and tools readily available, we can re-examine how we educate kids to best allocate their money into the appropriate spending, saving and giving categories, based on their goals, values and spending power. Setting up your FamZoo account through Amboy Digital Banking takes just minutes now, but will help create years of happiness in the future; a trade off, we believe, is well worth it!