It’s the time of year when parents, grandmas, grandpas, aunts, uncles and friends fatten kids’ wallets with holiday cash.
For most kids, those greenbacks may as well be on fire. They can’t wait to score the hottest video game, basketball shoe or high-tech gadget. If the 25th is a day for opening presents, the days after Christmas are filled with the not-so-pleasant sounds of kids begging to hit the stores to spend their Christmas or Hanukkah green.
Shortly before Christmas, a friend’s 12-year-old son had his eye on the latest, LeBron James three-figure sneaker.
“How long will it take me to save up for these?” he asked. (And with a straight face, mind you.)
For those of us who grew up in the days of $14-buck Chuck Taylors, the very notion of spending $120 to $200 on a pair of basketball shoes is madness. But that said, my friend bemoaned the fact that he missed a golden chance for a teachable moment about money and finances, more specifically, about saving.
For community banks and credit unions, kids with holiday loot provide wonderful opportunities, not only to educate kids – and their parents—about money and savings. But it’s also a chance to gain a new lifetime customer.
Here are some ways to encourage kids to save and at the same time, attract a new customer:
Beth Kobliner, the author of the New York Times bestseller “Get A Financial Life” and a member of the President’s Advisory Council on Financial Capability, helped spearhead the Council’s “Money As You Grow” initiative which gives age-specific money advice to kids. Here are some simple ideas. (Source: Forbes.com)
- From ages three to five, kids need to learn a lesson that’s tough for folks of any age to grasp: You may have to wait and save for something you really want. In a society that seems to demand instant gratification, the ability to wait and save may be an indicator of future financial success, Kobliner said.
- The Three-Jar Principle. Kobliner suggest using three jars. (My suggestion – use the good, heavy jars that your great grandma used to can peaches or pickles. They’ve got heft and give saving a special feel). One jar is for saving, one for spending, and a third for sharing. Divide any money he or she receives for holidays, birthdays or allowance equally among the jars. The “Sharing Jar” is for church offering, charity, or helping someone in need. Have your child set a goal. Talk to him about how much he needs to reach that goal and how long it will take to reach it. My suggestion: For the savings jar, deposit the contents weekly into the bank, removing the temptation to dip into savings.
- For kids ages six to 10, the key lesson is simple: Money is finite. If you spend it all, there will be none left.
- A great lesson can come in the grocery store. Kobliner suggests involving your child in decisions. For example, explain why you chose the generic juice over a well-known brand. The generic costs less, but tastes the same. Also, discuss aloud why you make the decisions you make as you roll up and down the aisles. It creates a financial consciousness within the child, helping him or her in their own financial decision making.
- For 11-13 year olds, the lesson is simple. The faster you open a savings account, the faster your money can grow through compound interest. Keep it simple, describing how compounding works in concrete terms. For example, saving $100 annually every year starting at age 14, you’ll have $23,000 at retirement. Investor.gov offers compound interest exercises for kids that help paint a clear picture of what savings and interest can do.
Also, you can explain savings this way: Would you rather have a snack from the machine at school every day, or set aside that money for a new laptop in the future.
Banks and credit unions can come alongside families in encouraging kids to save. Consider these ideas from bankmarketing.com:
- Build a marketing pitch during the holiday season encouraging kids to save. Giving every child that comes into the bank or through the drive-thru a new piggy bank makes an instant new friend. There are also banks available that will allow kids to set aside dollars to spend, to save and to share.
- If a child opens a savings account, make it a big deal. Have a high-ranking bank official come out to welcome its newest customer. On birthdays or during the holidays, chip a little into the child’s account, be it one dollar or five. You’re making a customer for life. Make a memory.
- Consider visiting local schools to provide financial education, using easy-to-understand materials. Piggy banks or other favors, as well as cookies or pizza, would be a big hit with future customers. A caveat: Be aware of children’s allergies. A marketing gem can turn into a bust if you don’t.
- Meet with kids and their parents to talk about short and long-term goals. This opens the door to marketing other opportunities at the bank, like 529 College Savings Plans.
- At the cornerstone of this youth movement, the bank’s staff has to buy in. While some may roll their eyes at the prospect of chatting with a six year-old about money, staffers need to think like prospective little savers. It’s about the long term.
