Setup spending, saving, and giving jars
Handing kids money isn't enough to teach them lifelong financial lessons. Their allowance should be paired with management lessons. Many experts suggest parents set up their kids with three jars, piggy banks, or the like labeled with the primary financial functions: saving, spending, and giving.
- Spending tips: Having one stash of cash that's subject to their decisions only — barring anything illegal or against the family rules — is both fun for kids and a big learning opportunity. They may only blow their funds at the candy store a couple of times before deciding that saving some comes in handy when their friends invite them to the movies.
- Saving tips: Help kids understand what saving money can help them achieve. Walk kids through sort of high-value things they may want to save up for, from video games to a new bike. Teach them the math to show how saving two more dollars per week could get them riding that bike six months sooner. You can also motivate savings by matching their savings on an annual or quarterly basis.
- Giving tips: Setting aside money for giving teaches kids one of money's greatest powers: to make a difference.4 Have your kids set aside giving money each week, and then introduce them to some causes or charities that fit their interests. Help them learn exactly what their money will fund — how many bowls of soup or pet vaccinations, for example — and they'll start to feel really good about giving.5
Grow money lessons with age
It's important to structure kids' allowance according to their developmental phase. While every kid develops differently, here are some allowance practices kids are generally ready for at different ages.
- Preschoolers: Play grocery store with play money. Provide kids with a few alternatives and ask them to choose, like foods or clothes. Allow kids to pay for one item at a store.
- Early Elementary: Open a savings account and explain interest. Teach them how to compare prices. Use their spending money to discuss wants and needs.
- Middle Elementary: Help kids set savings goals. Allow them to earn extra cash by doing chores above their normal family contributions.
- Early Teens: Open a checking account for your kids and encourage them to earn money through their business ideas. Teach them about saving money for emergencies.
- Middle/Late Teens: Let kids do grocery shopping. Potentially replace their allowance with a job. Involve kids in planning for their big needs, like college education or a car.
When you're ready to open a saving account for your kids, Synovus is here to help with savings accounts for minors that have no minimum balance or monthly fees,6 as well as guidance from bankers who may be parents too.