Financially literate people tend to build more wealth, live happier lives and even have better health outcomes. So, it’s essential to teach your children financial literacy at a young age, setting them up for success as they enter into the “real world.”
Here at CNBC Select and CNBC Make It, we spend all day, every day reporting on money: what to do with it, how to spend it and where to put it. But what money lessons, if any, are we taking home to inspire an audience much different — our kids?
Choose the best savings account
1. Money is a limited resource; spend it wisely
One of the most important lessons CNBC Make It Executive Editor Jenna Goudreau is teaching her five-year-old daughter is that money is a great tool, but not limitless, she tells CNBC Select.
“I take her to the store and let her spend her ‘budget’ of piggy bank money, so she can see firsthand that she has to make choices about what she can afford,” Goudreau says, adding that toddlers will learn they can’t get everything they want.
As kids get older, parents can introduce prepaid family debit cards like FamZoo and Greenlight that can help teach kids money management and financial literacy from a young age. With these cards, you can preload cash and digitally track what your kids are spending money on. Parents can set up savings goals and assign chores for an allowance through the apps, too.
FamZoo Prepaid Card
On FamZoo’s site
Card opening fee
$0 for first 4 cards, then $3 for each additional card
Monthly fee
$5.99 (or as low as $2.50 if you prepay for 24 months in advance)
Maximum balance
$5,000
Cash reload fee
$4 to $6
ATM withdrawal fee
None, but the ATM operator may charge a fee
Foreign transaction fee
None
Rewards
N/A
Mobile check deposit
No
Terms apply.
Pros
Great way for parents to teach kids about money
Parents can control kids’ spending, set up automatic recurring transfers (i.e. allowance), lock and unlock cards
No card opening fee for the first 4 cards (then $3 per card)
No fee on purchases made outside the U.S.
Cons
Up to a $5.99 monthly fee
$3 card opening fee after your first 4 cards
No mobile check deposit
Greenlight Debit Card
Cost
$5.99 per month for Core Plan, $9.98 per month for Max Plan, or $14.98 per month for Infinity Plan
Rewards
1% cash back
Minimum deposit/balance
None
Overdraft fee
None
ATM access
Any ATM with a Mastercard, Visa Interlink or Maestro name or logo
Parental controls
Parents can block spending categories and more
Terms apply.
Pros
Earns cash back
Ideal for all young ages
No minimum deposit/balance requirements
No overdraft fee
Cons
Monthly fee applies
No ATM fee refund
2. Invest
The earlier you invest, the more time your money has to grow, so that’s something to take advantage of on behalf of your kids while they’re young, Loren Savini, former editorial director at CNBC Select says.
Start by opening a 529 college savings account — a move that most of the journalists interviewed for this story made. These state-backed investment accounts allow you or your child to make tax-free withdrawals if the money is used on qualifying educational expenses, including college tuition, housing and books.
CNBC Select Editor Elizabeth Gravier opened two 529 accounts (one for each of her sons) both before their first birthdays.
States have their own 529 plan, but in many cases, you don’t have to live in the state to contribute to the plan. For example, New York’s 529 College Savings plan is open to any U.S. resident and contributors can put up to $520,000 into the account.
New York’s 529 College Savings Program
Information about New York’s 529 College Savings Program has been collected independently by CNBC Select and has not been reviewed or provided by the issuer prior to publication.
Minimum opening balance
None
Maximum overall contribution
$520,000
Portfolio options
Options include age-based options and individual options
Underlying funds
Investors can choose funds from Vanguard mutual funds
Fees and expenses
Total asset-based expense ratio: 0.12%
Terms apply.
Pros
Available to residents of any state
Offers low fees
Diverse investment options
Tax benefits for residents
No minimum contribution to start
Offers gifting platform that allows gift-givers to save profile for recurring or future contributions
Cons
Performance is lower than others on list
When your kids are older, you may want to introduce them to different types of investing. Teens can open a brokerage account as young as 13 years old. The Fidelity Youth® Account is a great option, as there are no minimums or monthly fees. Once the parents open the account, the teen can learn how to invest firsthand by managing the account, along with their parents’ oversight.
Fidelity® Youth Account
On Fidelity’s site
Minimum deposit and balance
Teens aren’t tied to any account minimums and there are no monthly fees
Fees
$0 commissions for online U.S. stocks*
Bonus
For a limited time: When you (parent or guardian) initiate the opening of a new Youth Account and your teen (aged 13 to 17) downloads the Fidelity Mobile® App and activates the new account, your teen will receive a $50 deposit as a reward1
Investment vehicles
Brokerage and trading: Fidelity® Youth Account
Investment options
Stocks, ETFs and mutual funds
Educational resources
Teens can access a financial curriculum made just for them to learn about saving, spending and investing
Terms apply.
Pros
No account minimums or monthly fees
Educational investing resources customized for young teens
Requires parental oversight: In order for a teenager to sign up, their parent or guardian must already have an existing Fidelity account. Parents can monitor their child’s account activity and set up notification alerts for trades, transactions and spending
Teen users get access to a free debit card with no subscription fees, no account fees, and no minimum balances
Cons
Only available to teens aged 13 to 17
In order to sign up as a teen, parent or guardian must already have an existing Fidelity account
*$0.00 commission applies to online U.S. equity trades and Exchange-Traded Funds (ETFs) in a Fidelity retail account only for Fidelity Brokerage Services LLC retail clients. Sell orders are subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal). Other exclusions and conditions may apply. See Fidelity.com/commissions for details. Employee equity compensation transactions and accounts managed by advisors or intermediaries through Fidelity Clearing & Custody Solutions® are subject to different commission schedules.
The Fidelity Youth Account can only be opened by a parent/guardian. Account eligibility limited to teens aged 13-17.
1Limited Time Offer. Terms Apply. Before opening a Fidelity Youth Account, you should carefully read the account agreement and ensure that you fully understand your responsibilities to monitor and supervise your teen’s activity in the account.
3. Live within your means
CNBC Make It Senior Managing Producer Eric Clark says living within your means is one of the most underrated lessons of our time — and a value he’s instilling in his 19-year-old daughter.
“Especially in today’s social media–obsessed world, I think a lot of people see a lifestyle they admire online and will do whatever they can to mimic it in some way. Far too many are willing to go into debt just for likes,” Clark tells us.
Recent surveys indicate that members of Gen Z, in particular, face pressure to overspend due to social media: About 70% of Gen Z respondents in a recent Empower survey reported experiencing financial FOMO (fear of missing out) while scrolling through social media.
“I let my daughter know it’s perfectly okay to say ‘no’ if something doesn’t fit within her means or budget,” Clark says.
You can provide your teenage kids with guidance on how to spend by having them download a budgeting app like Rocket Money, which breaks down spending by category like dining and drinks, shopping, saving and entertainment, so your young adult can stay on track.
Rocket Money
Cost
The basic plan is free. Rocket Money Premium is $6 to $12 a month with a 7-day free trial. Bill negotiation services cost 35% to 60% of the savings earned
Standout features
Easily cancel unwanted subscriptions, track your spending and credit score, automate savings and get help lowering bills. Rocket Money Premium includes additional services like bill negotiation, net-worth tracking, credit reports and a subscription cancellation concierge service
Security
Rocket Money accesses transaction data via an encrypted token, uses Plaid API so user credentials are never stored, provides bank-level 256-bit encryption and hosts servers on Amazon Web Services
Availability
Offered online and on both the App Store (for iOS) and on Google Play (for Android)
Terms apply.
Pros
Rocket Money claims 80% of users save money by cancelling unwanted subscriptions
Bill negotiation services are available
Provides VantageScore 3.0 credit score and Experian credit report
Interest-free pay advance available up to $100 to qualifying users
A+ from Better Business Bureau
Cons
Nonrefundable bill negotiation fee can be up to 60% of savings
Does not negotiate internet, landline or cable/phone/internet bundles, electricity bills, security systems or satellite radio/TV bills
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At CNBC Select, our mission is to deliver high-quality service journalism and comprehensive consumer advice to our readers, enabling them to make informed financial decisions. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently of our commercial team and any outside third parties, and we pride ourselves on maintaining high journalistic standards and ethics.
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