In these in-the-moment times of instant messaging, streaming what you want, when you want, and having your favorite meal delivered in minutes, long-term financial goal setting can be an anomaly for children and teens.
 
Yet the need to plan ahead and learn the importance of saving, investing, and sound money management has never been more important. After all, if you don’t learn early on to save at least a bit of your allowance or babysitting money for that new video game, it will be a lot more difficult to save for a house or your retirement down the road.
 
At the same time, studies suggest that while interest rates have increased dramatically in recent years, personal savings rates haven’t kept pace – even though many indicate they want to save more. Data from the St. Louis Federal Reserve shows personal savings accounted for just 4.1 percent of disposable personal income as of April 2023, well below pandemic highs of 33.8 percent in April 2020, and lower than the savings rate of 6.2 percent a decade earlier, in April 2013.
 
So, what does this all mean? Beyond the challenge of having money for substantial purchases, without savings, we can’t easily respond to life’s inevitable, unexpected emergencies, whether that’s a vehicle breakdown, health issue, or job loss. A 2022 Consumer Financial Protection Bureau study found that 24 percent of Americans don’t have any money saved for emergencies; 39 percent reported having less than a month’s income in the bank.

The bright side: Saving today’s resources for tomorrow
Now the good news. One of the best ways to prepare children for their financial future is by instilling the principles of financial literacy – and that begins with modeling sound practices from the “teachers” closest to them: you.
 
Begin with age-appropriate steps when they’re little, graduating to more advanced concepts as they get older and perhaps eye their first car, for example.
 
A youth savings account is a great first step. It will take their financial knowledge beyond the piggy bank, offer a greater sense of permanency to their money, and establish the foundation of a life-long relationship with their community bank. Some parents encourage their kids to save half of what they earn or receive and follow along with them as they watch their “nest egg” grow, from their allowance contributions, birthday money, and interest.
 
Once children are a little older, bring them along when you meet with your banker and encourage them to ask questions. Living and working in the local community, we love being able to serve multiple generations – it’s a great opportunity for your youngster to get to know their banker better and for us to get to know them, a relationship we’ll build on as their financial goals evolve.
 
For teens who have regular expenses, such as for a sports team, a hobby, or a vehicle, a checking account like Peoples Bank’s Teen Access Checking Account is a practical solution that includes all the essential services a teen will need such the Teen Access Debit Card, Online and Mobile Banking, or Zelle. There are no monthly service charges, no minimum balance requirements, no check writing, and no overdraft coverage. It’s a simple, straightforward checking solution that helps teens learn to manage their spending.
 
Once teens start dreaming of the independence a vehicle offers, a first loan might also help them purchase their first car while having enough in the bank for necessary costs like insurance, gas, and maintenance. As a financial experience, it also gives them a taste of the bigger expectations of college expenses, rent, homeownership, and other responsibilities, including investing and retirement planning.
 
No matter where your children are along the financial literacy continuum, community banks have the resources and local expertise to help set them on the path to success. It’s a relationship they can count on wherever life takes them today, tomorrow, and in the decades ahead.
 
Peoples Bank district branch manager Vern Woods leads a team of bankers dedicated to the company’s “People First” philosophy. Together, they help customers access personal banking products and services such as checking accounts, savings accounts, retirement accounts, Certificates of Deposit (CDs), and consumer loans.