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There's a real disconnect between what parents want their children to do with money — learn how to manage it — and what most kids want to do with their money (spend, spend, spend).

Before your kids manage to spend all of the extra pocket cash they've received over the holidays, let's discuss ways to teach your child how to manage their money with savings accounts and money saving apps.

Strategy #1: Give Their Money a Place to Accumulate

The first step for kids learning how to manage their money is to let it accumulate so that they actually have something to manage.

If your child is just starting to save all of the money they receive, then you may want to begin with a piggy bank at home. Clear piggy banks allow kids to watch the money grow, and understand the concept of how not spending today means they will have more tomorrow.

What should you do if your child already has a piggy bank? How do you know if they're ready to transition from a piggy bank to an actual savings account? Here are a few signs:

  • Their piggy bank is full and there's nowhere else for the money to go.
  • They have a savings goal that will take them longer than a few weeks to save up for.
  • You've explained the concept of interest and they're interested in the idea that their money could earn them more money.

Strategy #2: Help Them Decide on a Portion to Save

Now that you have a savings space set up for your child's money to accumulate, it's time to set up some strategy.

Sit down with your child and decide together what portion of money should be saved. Share your own rule for this, and if you don't have one, now is a great time to make one.

This strategy has a compounding effect because by creating this savings habit now, the amount of money they'll save will only grow as their allowance eventually becomes paychecks.

Strategy #3: Reinforce the Concept of Saving With Apps

Money saving apps that use gaming platforms to teach children are very powerful. Not only do your kids have fun, but they learn critical thinking skills, use their creativity and grow their capacity for "three-dimensional thinking."

Check out these money saving apps to educate and reinforce savings behavior in your child:

  1. Unleash the Loot! (Free, Ages 5-8): Your child gets to help save endangered animals by earning and saving up money to rescue and take care of them.
  2. Money Metropolis (Free, Ages 7-12): Your child gets to choose from one of three saving goals. They can then direct their avatar through the world of Money Metropolis earning money, spending it and hopefully saving up for their goal — which is the whole point of the game.
  3. Savings Spree ($5.99, Ages 7+): Kids can start learning how daily habits can add up to more savings to be used toward actual savings goals or what happens when they spend all of their money away.

Remember that in order for kids to have money to manage at all, they have to save it as soon as they receive it. Work through the strategies above, and this time next year your child will be ready to move onto more advanced stages of learning about money management.

Disclosures

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on www.Key.com, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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