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The best gift this holiday? One that lasts a lifetime

Shopping, wrapping, and unwrapping gifts is a highlight of the holiday season. But how long will most of those gifts last? This year, along with all the must-have toys and cool new devices, why not give the kids on your list something they can pass down to their own kids someday? It’s the gift of financial literacy – or as we like to call it, Money Smarts.

Spending and saving money is a part of all our lives from beginning to end, so we should teach it the way we teach other life skills. This means you can start with the basics when they’re very young.

What is money?

Kids are naturally curious, and they’re always watching. They see you using cash or swiping your card all the time. Let them see and feel paper money and coins, and talk about the different value of each. Ask and answer their questions about debit cards and credit cards, including how you are using them, where the money comes from, and the responsibility that comes with owning them. Just like dressing up or playing house, the young people around you will imitate your behaviors – and choosing good behaviors starts early on.

What is spending?

As children grow older, there are plenty of opportunities to learn about spending. In fact, spending is often a matter of learning what not to do. Recognize that it is not the responsibility of marketers, media, or peers to provide this education – that’s down to the adults in their lives. Here again, it takes a combination of modeling (what you show them) and teaching (what you talk about with them) that makes the difference. The fundamental lesson is that you can choose how to spend the money you have, and those choices will determine how much value you can get for your money, and how long it will last.

What is saving?

So if you’re not spending your money, what is it good for? The answer is saving. Saving money can be a hard concept for kids to grasp because it is not as tangible as spending. They can’t see what they are saving for. Give them some ideas of things they can save for, such as:

  • Toys or other items they want for themselves
  • Gifts for family members’ birthdays
  • Long-term goals such as a car fund or college fund

Again, emphasize that they have the power to choose. Choosing to save today, rather than spend, will give them more freedom to choose later on. The sooner you can start this conversation, the more likely they’ll think of the future and save some money rather than spending it all in one place.

Remind them often

Kids tend to have short attention spans, so a big part of teaching money skills is teaching them early and reminding them often. When they get money for birthdays, Christmas, and graduation, ask them how much of it they plan to put into savings. Have a conversation about what they are saving for. If they start a summer job, that’s an even better opportunity. The dual experience of earning their own money and choosing to save some of it is a supremely satisfying accomplishment – one that feels so good they’ll want to repeat it. The sooner you can instill a positive relationship with money, the more likely it’ll create good habits.

Open a Star Savers account with them

Opening your first bank account can be a powerful experience. It helps children feel that they are in control of their money, and rewards them for making disciplined choices. They know the account is theirs. They can watch the balance grow, and experience the power of compound interest long before they need to use their money.

This is why we created our Star Savers accounts. From birth to age 19, you can help the young people in your life open a Star Savers savings account. It’s an account in their name – just like you and other adults have – but it’s also more than that.

As a Star Saver, kids learn how to save and spend their money and receive fun perks and surprises in the mail (like sweet treats, toys, and a birthday card with a gift) — all with the theme of saving money for the future.

Take a moment and think about the kids in your life, whether it’s your own children, your niece or nephew, grandkids, or godchildren. Now, think about where they could be financially in 20 years if they started saving money today. You can help them with this journey and give them a gift that lasts — teaching them about money and opening a Star Savers account.