April is National Credit Union Youth Month, and all month long we're sharing tips and tricks to get kids interested in saving.
Many parents work with their children to establish good savings habits early on. What most parents and kids omit, though, is an emergency fund. Yes, emergencies, even for kids. Granted, they won’t be shelling out thousands of dollars for a roof repair or a medical crisis like their parents might, but emergencies come in all shapes and sizes, and to all-sized people.
No one needs convincing that having funds for an unexpected expense is crucial to financial security. In fact, building an emergency fund is the first of Dave Ramsey’s famous seven baby steps for getting out of debt. It’s definitely something you want to build into your kids’ psyche. So why not start now?
Some examples of small and not-so-small emergencies for children are:
The pair of sneakers left in the locker room after PE, now gone forever
The shattered car window from an overeager (but poorly aimed) baseball
The huge data plan overage charge
The misplaced spending money for an afternoon at the mall
So yes, kids have emergencies. Helping them set up a fund to pay for some of these mini-crises instead of bailing them out each time will teach them to be prepared.
Here’s how to do it:
The next time your child has a financial emergency, have them pay for all or part of it. It’s okay to share the costs for larger emergencies, or even for smaller ones. Your child will still learn responsibility by coughing up some of the funds on their own.
These should be situations due to negligence, irresponsible behavior or simple forgetfulness on the part of your child. When the fund is depleted for an emergency, be sure to encourage them to replenish it by going back to step two.
Remember; it's baby steps like these that will prevent your child from having to crawl their way out of debt later on in life.