The savings program is one step toward educating children about financial responsibility, says Stephen Hummel, senior vice president at Hagers-town Trust.
"It's not just about learning how to save, it's about the total financial package," he says. Learning about finances, credit, borrowing and using a checking account "is part of a learning process," he adds. "And it can't wait till (children) are 18."
The Williams family in Maugansville wanted to teach their three children about saving with a goal in mind, and how to recognize and be prepared for times during the year when extra money might be needed.
So they decided to use Christmas as a lesson in financial planning.
"We're Christians, and we really wanted to teach our kids about Christmas being about giving, not about receiving," says Minan Williams. So she and her husband, Steve Williams, set up "Christmas jars" for their three children. Each week, starting in January, the children, ages 11, 9 and 7, took 50 cents out of their $3 allowance and placed it in the jar. By the time December rolled around, the kids each had saved about $28. As a family, they talked about how to use that money to buy a gift for each member of the family. Any leftover money was placed in The Salvation Army red kettles.
Saving was a multipurpose exercise, Minan Williams explains. "One, we wanted to teach them to plan ahead," she says. "Two, we wanted to teach them that a little bit adds up, and three, if you plan ahead, it's not a big drain at the end of the year."
Through the Christmas planning and shopping, the Williams kids also learned about looking for sales, pooling their resources to buy a bigger gift, and how to figure out what something costs when tax is added.
"The kids became very creative at realizing how to get the most for their money," Williams says. "I think it's an easy way to teach the kids planning ahead and then budgeting."
Here are some more ideas to get kids thinking and learning about money at different ages.
When children are 5 to 10 years old ...
Give children an allowance and introduce the concept of saving. If parents choose to give an allowance, children should be instructed as to how that money can be used.
The Williams family provide their children with banks with three separate slots. The banks come with stickers to indicate money to be saved for the bank, stores and for church. The Williams children receive their weekly allowance separated into quarters and dollar bills to make it easier for them to divide their money.
The children then use money from the "church" slot of their bank to donate during church offerings. The kids get to decide how to use the money they save in the "store" slot. Once they save up enough money in the "bank" slot, they get to make a deposit at the bank. Handling allowance money this way teaches children that money isn't just for buying things, but for creating savings and giving to others, Minan Williams says.
When children are 11 to 14 years old ...
Family budgeting. When taking a family vacation or daytrip, talk about the family's trip budget with children. Let kids know how much can be spent, and have a discussion about how the family would like to spend the disposable funds. Talk about setting aside money for meals and research how much different activities cost. Letting kids in on the process of budgeting for a trip will give them a perspective on how much things cost. If choices must be made based on finances, allow the kids to help decide what to spend money on and what to skip.
When children are 15 years old and older ...