4 Tools to Help Raise Money-Smart Kids
Some of the most important financial lessons for kids happen during the course of everyday life, as they watch your money management priorities in action. You can help them ensure they are set for life by saving together, discussing money together, and preparing them for challenges when they arise.
According to the Consumer Financial Protection Bureau, when families discuss money early and reinforce financial lessons throughout childhood, young people are more prepared to make informed financial decisions throughout adulthood. These tools can help you start managing money with your students and ensuring they have the resources they need to start building a financial foundation that will benefit them their entire lives.
1. Start with a Youth Savings Account
Hands-on money lessons can start early when you give children access to help you manage their funds. At Andrews Federal, we offer account options that grow with your child, including:
Sprouting Savers Accounts: For children from 0 to 13, these accounts can be opened with as little as $5. Parents or guardians can manage the account while children learn the basics of saving.
Ca$h Commanders Accounts: As children become teenagers, they can transition to the Ca$h Commanders Account, which is a checking account and can include a debit card. They can manage their own Digital Banking access, so they can monitor their funds and watch them grow. At the same time, parents retain oversight, which can lead to beneficial conversations about money and finances.
2. Turn Everyday Moments into Money Lessons
Your children will absorb much of their financial knowledge from watching you manage money, even if you don’t say a word. It can be helpful to speak some of those lessons out loud to make sure that your children understand the factors driving your financial decisions.
For example, you can:
Encourage children to save part of every birthday or holiday gift, and explain your thought process on why their saving is important.
Work with them to set goals for items they want to buy, instead of buying it for them immediately.
Compare prices together while shopping, and include them in grocery shopping or meal planning.
Explain how your family budgets for vacations or holidays.
Give older children a monthly spending budget or allowance and let them make decisions.
Instead of telling children, “We can’t afford it,” tell them that you choose to prioritize expenses differently, and explain your thought process.
These everyday conversations help children understand that money is a tool and something to be proactively managed. It helps them recognize the value of a dollar and to understand how you align your expenditures with your family’s values.
3. Save for Education with a Coverdell ESA
College tuition expenses continue to skyrocket. In the years between 2000 and 2022, college room and board increased about 39 percent, while tuition rose 60 percent.
Those costs can start making school feel out of reach for many families. However, there are tools that can help you start saving now and start growing their college funds.
For example, a Coverdell Education Savings Accounts (ESA) can help families prepare for future college expenses by allowing families to:
Contribute up to $2,000 annually per beneficiary
Grow earnings tax-free
Make qualified withdrawals tax-free when used for eligible education expenses
In addition to college expenses, Coverdell funds may be used for qualified elementary or secondary education expenses. You can make this a shared endeavor, by allowing friends and family to contribute on behalf of your student, which makes it an easy option for grandparents to give the gift of education on birthdays or holidays.
4. Encourage Achievement Beyond Saving
Again, because college costs are expensive, you can never start thinking too early about how you will cover those annual tuition bills. Each year, Andrews Federal supports students through its College Scholarship Program, which can be a great supplement for college costs.
The program awards scholarships to graduating high school seniors based on academic achievement, leadership, extracurricular involvement, and community service. Scholarship funds may be used for tuition, books, and other education-related expenses at accredited colleges, universities, or trade schools.
Even before reaching college age, students can apply for a summer camp award to help defray summer programming costs and give students access to valuable and enriching opportunities.
Each year, Andrews Federal Summer Camp Awards to help children ages 6–16 participate in educational or skill-building camps. Students have used these funds for everything from STEM camps to nature exploration, and everything in between!
Building Financial Confidence One Lesson at a Time
Helping your children develop financial confidence takes time, commitment, and repetition. You cultivate their attitude which each small decision you make and each process you complete together, including:
Making regular deposits
Setting savings goals and watching money grow
Prioritizing spending, saving and sharing
Learning to budget
Understanding the value of delayed gratification
As adults, your children will be faced with decisions about college, careers, credit cards, loans, housing, and retirement. The earlier they begin learning financial skills, the more prepared they'll be to make confident financial choices.
