They say money does not buy happiness; but also that money does not grow on trees.

Though the former may be debatable for some and the latter is certainly true, all can agree that money is important.

The question is: At what point should parents discuss with their children the importance of saving money, and how?

Janice M. Butler, CPA, from Newtown, said the process starts with parents putting aside money for children years before the discussion with them.

“Ideally, it would be if the parents can save for their child as soon as they’re able to,” Butler said. “It’s what parents can be able to invest without hurting their current financial situation. It’s almost like making it another bill you have to pay each month.

“The sooner you put money away, the more it has a chance to grow so you can potentially get a return on your investment,” Butler added. “The longer it sits and is invested, the more it can grow.”

Butler pointed out that parents must plan accordingly if they intend to send children to private school as they grow up, and once it comes time for college. Parents or students are currently looking at spending roughly $50,000 annually for private college education.

The general consensus among five financial experts interviewed is that the process of saving and speaking to children about preparing for the future — by putting money away — should begin when they are in grade school.

Birthdays or other holidays when children receive money make for a good time to work on learning financial responsibility, said Butler, adding that a child may be allowed to use some of the money to buy a toy, but be required to save a portion of it.

Some may not be in position to start saving until they start working. Butler suggests people take advantage of company matches for 401(k)s. “Make sure you’re doing whatever is necessary to get the maximum match from an employer,” she said.

Magic Money?

Bob Tait, finance director for Newtown, notes that children undoubtedly see their parents using credit cards and are likely to be disillusioned about how cards work.

“To them it must seem like magic; the money comes from nowhere. They need to know that it comes from somewhere,” said Tait, adding that children can begin learning about financial responsibility when they are preteens.

“You can enforce it when they’re really young just using a piggy bank — a good old piggy bank,” Tait said.

Tait suggests children can be taught to save years in advance for a car, for example.

As children grow up and become young adults, they might get checking accounts and/or credit cards.

“The young adult needs to know where the money is coming from and the implications of borrowing,” Tait said.

Tait suggests that a when a person has their first job out of school is a good time to start putting away as much money as possible for retirement.

Ken Weinstein, president and chief executive officer of Newtown Savings Bank (NSB), said the saving can start with parents investing in a 529 college savings plan. They can show children that money from grandparents, for example, goes into this account; they learn the importance of saving.

Getting children into the habit of saving should begin when they are in preschool or elementary school, Weinstein said, with the saving process growing from a bank account to an IRA when they are old enough to invest money for retirement.

“It’s never too early,” added Tanya Truax, vice president/public relations director of NSB.

“When it comes to deciding what concepts about money to discuss with your child and at what age, I am not aware of any hard and fast rule. I have read some studies that say that children are able to understand basic concepts about money as early as 7 years old while others say 10 years old,” said Patrick Kelley, senior vice president of Savings Bank of Danbury. “I personally feel that the sooner you familiarize children on the topic of money, the better prepared they’ll be for the future. It is essential that we teach our children the importance of money, how to be financially stable and teach them respect for the value of a dollar.”

Kelley’s advice to parents is to consider giving children money as a reward for completing chores or tasks. “This will teach them that they need to earn money rather than expecting it to be handed to them,” he added. “Try to keep it on a level they can relate to and something fun. If you have a trip planned, or there’s a special toy they’ve been eyeing, have them put aside money from chores that they can use to buy something with their own money. They seem to take more pride in it when they’ve saved for something themselves.”

Kelley suggests parents teach children about savings by having them open a savings account and help them figure out how long it will take to save for something with earned or gifted money.

Newtown Savings Bank offers a Great Start savings account in which the bank pays five percent on the first $1,000 invested by the account holder. The high interest rate helps to encourage children to develop good savings habits, Weinstein said. The bank also offers a student checking account. High school age students need to know about credit cards, managing a checking account, and identification protection, Weinstein said.

“It’s one less thing they have to worry about when they make the transition into college,” Weinstein said.

Money can buy a lot, including some happiness. As Weinstein put it: “Happiness and less stress are tied to financial well-being.”

Savings Bank of Danbury offers a 3.0 Good To Go student checking account. “This is a really unique account where high school and college students get rewarded for staying in school and getting good grades,” Kelley said.

High School Money Smarts

Butler said it would be helpful for high school age students to learn about managing finances and credit cards. She teaches finance-related courses at the University of Hartford and comes across students who do not have an understanding of managing money, including use of credit cards. She said it would be ideal if basics of finance were taught to high school students.

NSB’s employee volunteers teach Junior Achievement classes in Bethel and Danbury, and 16 sessions were conducted in 2019. These programs are designed to help prepare students for the real world by showing them how to generate wealth and effectively manage it, how to create jobs that make their communities more robust, and how to apply entrepreneurial thinking to the workplace.

NSB has a branch at Newtown High School, open one day during the week, for students and teachers, and offers internships for students to learn the basics of being a bank teller.

“You need to have these financial skills to have a successful life. I do think it’s a concern these days. I’ve heard it a lot. There’s not a lot of education for children,” said Truax, adding that NSB is putting in an effort to teach some of the necessary things children and young adults should know about managing money.

Savings Bank of Danbury teaches financial education classes through Junior Achievement, providing K-12 students with money managing skills. “They are taught about money and how to live a stable financial life with lessons using age-specific topics, role playing, and games,” Kelley said.

Savings Bank of Danbury also provides mentoring through the Danbury Student and Business Connection, as well as financial education classes at Western Connecticut State University and Danbury High School.

According to a 2018 morganstanley.com article, “5 Tips For Talking To Your Kids About Money,” children know more than parents think, and parents should think about creating appropriate context for answering important questions such as: How did we accumulate money? And would we be different if we lost it? More advice in the article is to “walk the talk,” suggesting “To truly get the message across, you have to live, not just speak, your values.”

The article mentions that discussing money with children is an ongoing dialogue. “By keeping the conversation going, you and your children can continually use your financial capital to live out your family values and goals,” Glenn Kurlander, head of family governance and dynamics at Morgan Stanley Wealth Management, said in this article.