Why Teaching Kids to Save Early Sets Them Up for Financial Success

Every parent wants to set their child up for success, including financial success. At a time of heightened economic anxiety, parents can take comfort in knowing they can do something to support a secure financial future for their children: teach financial literacy from an early age.

A recent FINRA Foundation national survey found Americans with higher financial literacy are more likely to spend within their means, have emergency savings, avoid common financial pitfalls, and save for retirement. To set your children on a path to financial wellbeing, you can start to lay the groundwork now.

Why Early Financial Literacy Matters

Children are students of the world around them. They are constantly learning from their everyday experiences: social interactions, media exposure, and their cultural environment. This includes picking up on the role of money in our society — they’ll want to know where it comes from and why it’s important. Don’t leave their conclusions to chance; make sure you take control of the conversation.

If talking to your children about money makes you feel uncomfortable, you’re not alone. There is a natural impulse to shield children from some of the more challenging parts of life, such as financial worries, for as long as possible. However, this wrongly assumes that children find money stressful. They don’t have to. When children learn about money early on, before it becomes a source of stress and worry for them, they can form a healthier understanding of money. It’s a tool, not a toy.

Kids feel empowered by knowledge. Give them the chance to learn and practice money management, and it can be a source of pride that leads to more responsible financial decisions later in life.

How to Start Teaching Financial Concepts at Different Ages

Parents can help their children build healthy money habits and form a solid foundation for future financial behavior through conversations, experiences, and play. It can even be fun! Here are some age-appropriate ways to start developing your child’s financial literacy.

Your Child’s First Savings Account

Setting up a formal savings account is an exciting milestone on your child’s financial literacy journey. The Old National’s Kid Start Savings Account is designed to teach kids the fundamentals of saving, budgeting, and growing their money through interest¹. It has kid-friendly features that make it easy to use. There is no minimum balance requirement and no monthly service charge. Plus, your child will earn a competitive interest rate.

Graduating from a piggy bank to a proper bank account fosters financial responsibility by giving kids a hands-on way to manage their savings, track their progress, and set future financial goals. It’s a gateway to financial independence.

For Young Kids (Ages 3-7)

Parents can incorporate financial experiences and concepts into early childhood activities, both play-based and outside the home, to teach basic financial concepts and norms.

A Consumer Financial Protection Bureau (CFPB) report on the building blocks of financial literacy says preschool children are ready to learn that:

• People use money to purchase things.
• A person earns money by working.
• Some people save money over time to purchase things later.

This is a great age to show your child how money works in the everyday world. Let them see you pay for purchases, with cash or a card, and explain the difference in methods. Show them the receipt afterward — point out how the items you purchased had an individual value and tax was added on top. When you get home, build on this experience through play-based learning. Make up a game with your child about going to the bank, or a store, or earning money for a job well done.  

A small allowance for a school-age child can be a great way for them to practice saving money. Discuss with them the difference between needs and wants. They may benefit from a visual tool, such as a piggy bank or jar system, so they can watch savings grow. Start with a short-term, realistic goal, like saving up for candy or a small toy.

For Tweens and Teens (Ages 8-17)

Parents can help their older children absorb rules to live by and establish day-to-day habits that shape how they earn, save, and shop, according to the CFPB. This takes more hands-on practice and explicit guidance.

When you’re at the store with your tween, encourage them to be the one to handle the transaction at the checkout. Teach them simple budgeting by creating a back-to-school shopping list and sticking to it. When they’re ready for a cell phone, compare prices and features together before you buy.

Teenagers may start to earn and spend money on their own. Parents still play a critical role, offering supervision, guidance, and feedback as they encounter new financial tasks and challenges. Seize these opportunities. For example, your teen’s first after-school job is a chance to have them open their first checking account. Students under 25 can open an ONB Student Checking² and build experience with digital banking³, mobile check deposit⁴, and digital payment and transfer options. There is no minimum balance and no monthly service fee.

3 Practical Tips for Parents to Get Started

At a time when more than half of Americans say finances are the top source of stress in their lives, parents may feel reluctant or ill-prepared to discuss financial matters with their kids. Relax. First, it’s not too early or too late to start these conversations. Second, you don’t need to give your child a PowerPoint presentation. Here are 3 easy ways to get started that won’t overwhelm you or your child.

1. Use everyday activities (like trips to the store) as teachable moments. What are you buying—is it a need or a want? How are you paying—what’s the difference between a debit card and a credit card?  
2. Demonstrate your own financial values. Show them how you stick to your shopping list or compare products before you buy. There is room for fun here too, like celebrating a cheaper gas price or a great sale.
3. When a major family event arises, make a budget together. This can include getting a pet or buying a new car. Involving kids in age-appropriate discussions can boost their interest in money and their confidence in using it wisely.

The Lifelong Impact of Financial Literacy

For too long, financial education has been an afterthought. This is a disservice to our children, who will need to learn money management skills to thrive both personally and professionally. Financial stress can negatively impact sleep, mental health, self-esteem, physical health, and relationships, according to a PwC survey.

At a national level, momentum is building to better equip the next generation with the tools and skills they need to manage their finances: 35 states now require students to take a course in personal finance to graduate high school, with nine more states jumping on board in 2023 alone. This is a step in the right direction, but there is still a gap that parents are best equipped to fill.

Financial literacy will be on ongoing journey. Starting early with simple lessons and tools like the Kids Savings Account helps build a strong foundation for financial success, helping children grow into responsible and confident money managers who will become finally independent adults.

¹$50 minimum opening deposit required. If account is closed within 180 days, a $25 fee will be assessed.  For interest-bearing accounts, the interest rate and annual percentage yield may change. At our discretion, we may change the interest rate on the account periodically. Interest begins to accrue no later than the business day we receive credit (collected funds) for the deposit of noncash items (for example checks). If the account is closed before interest is credited, you will not receive the accrued interest. ²$50 minimum opening deposit required; $25 fee if closed in first 180 days. ³There are no Old National fees to use Mobile Banking; however, there may be charges associated with data usage on your phone. Check with your wireless carrier for more information.⁴Not all accounts or customers are eligible for Mobile Deposit. Deposits subject to verification and may not be available for immediate withdrawal. See Terms in App for deposit limits and other restrictions.  0425-069