UHCL : Teaching Kids To Save Money Now Pays Big Dividends In The Future

Press release from University of Houston-Clear Lake:

December 27, 2021

We all know that money is important in our lives, and it will eventually be that way
for our children. The more they can understand about managing their personal finances,
the better off they will be. They will have to face decisions about making retirement
accounts, mortgages, auto loans, credit cards and an array of other finance-related
matters. We don't want them ill-informed and making bad decisions.

Yet studies show financial literacy is appalling low in society. Despite required
financial literacy classes in schools and educational programs offered by credit unions
and other groups, financial literacy remains low. What's a parent to do?

There is a commercial on TV right now that shows a father taking his empty coffee
can and putting a piece of tape on it with the words, "new mitt." And then he and
his son put their pocket change in it as they save up for that new baseball mitt the
son wants. Then, when the mitt is purchased, the tape is changed and they begin saving
for a new item, and then later, another item. The last scene shows the son as a grown
man. He takes his empty coffee can and puts a piece of tape on it that says "new mitt."
He learned a lesson from his father about saving to get the things he needed in life,
and he passes that lesson to his own son.

Talking about finances to a child is about as interesting to them as watching wet
paint dry. But kids like doing things. The father in the commercial got his son involved
in the process without the lecture. Carefully getting kids involved in the process
of managing money is the key to teaching them about managing money. One of my most
vivid memories as a child is going in the local bank every three months with one of
my parents to have the interest in my savings book recorded for that little 10-dollar
savings account they opened for me. Not only was I fascinated by this Fort Knox-like
building we entered, but I could not believe that these people would actually pay
me money to keep my money safe for me. Saving was fun.How do you get your child involved? It's easy. Do you need to make a deposit this
week or get money from an ATM? Take your child along and let him help. He can hand
your deposit to the teller or push the ATM buttons for you. Do you have a bill you
can pay in person rather than by mail or online? Take your child with you and let
her hand your check and payment stub to the person who collects them. This experience
will almost certainly generate questions. Why are we here? Who are these people? In
answering those questions, your child will observe you saving for the future, and
paying your current bills. It will be a lifetime lesson.

Grady Perdue is a professor of finance at University of Houston-Clear Lake and also
holds the Certified Financial Planner professional designation. His teaching and research
interests are in personal finance and investments. He is also a member of the JSC
Federal Credit Union Board of Directors.

This press release was produced by University of Houston-Clear Lake. The views expressed here are the author’s own.