How to Teach Your Kids About Saving Money
Acquiring a sense of the implications of money is an important part of growing up and learning financial responsibility. How your kids learn about handing money can impact their future. To set them up for success later, you should be teaching your kids about saving money now.
Ways to Teach Your Kids About Saving Money
Learning how to handle money will take time. You may find that some children will grasp the concepts easier than their siblings. It is normal for children in the same family to have a different learning curve when it comes to personal finances, saving money, and counting.
Thankfully, there are several ways you can guide and teach your kids about saving money that will help them now and later in life.
Familiarize Your Kids With Spending, Saving, and Giving
These three pillars of financial responsibility are essential parts of learning about money. Talk to your kids about where your money comes from, as well as spending, saving, and giving it away.
Often children will want to spend money as soon as they get it, which is normal, especially for young kids. Help them realize the benefits of saving and giving away a portion of any money they get. By using these three pillars, your kids will learn that once money is gone, it is gone, and they will need to wait to earn more later.
Set an Example
The behaviors children see consistently will help shape their views and decisions as they grow and mature. If you set a positive example about spending and saving money, your kids will likely adopt the same habits.
Show your children the benefits of saving money now to use later. Talk to them about saving for the future for emergency expenses, like a car or home repairs, to avoid using high-interest credit cards. Explain how easily saving a small amount each month can add up to a substantial amount. Tell your child how you plan ahead for large expenses by using your savings account.
Give Them an Allowance
Children learn better by doing things, and saving money is no exception. Kids can have a hard time grasping the concept of savingif they don’t have any of their own as a reference point.
Their allowance does not have to be large or focused on completing a lot of chores. Many families will opt to give their children a small allowance, which covers simple housekeeping duties like cleaning their room. This way, children can learn about taking on additional chores to make more money and save up for large purchases they want.
Get Them a Bank Account
Often, money is not a tangible item to kids until they can see it grow into something more. Take your child into your local bank and have a bank account set up for them to deposit their funds regularly. Not only will this keep your child from spending their money frequently, but it can also show them how interest can add up over time.
Your kids may be more willing to leave their money in the bank if they can see interest collecting on their balance. Most banks will offer no-fee banking plans to children, which is the perfect opportunity to discuss how bank fees and service charges will affect their bank balance later as an adult.
Also read: The best piggy banks for kids
Include Them in Basic Household Finances
You do not have to go into fine detail about how much your mortgage taxes cost or what you spend on the electricity bill each month, but it is a good idea to keep your children informed. Kids should know that the cost of living is not free, and money is needed to pay for things that they do not know about.
If your family is saving up for a vacation, include your kids in the planning. You could let them know that it will take a set amount of months of saving to pay for an upcoming holiday. Explain to them that deciding between a mid-range hotel or a high-end hotel can mean more or less money for activities during the vacation.
You may be surprised at how willing your children will be to stay in a low-budget hotel if it means saving extra money to go to an amusement park for the day.
Show Them How to Shop Wisely
Part of saving money is shopping wisely. Show your kids how to shop off sale racks, discount stores, or second-hand boutiques. Compare the full-price items to sale items and discuss how one pair of regular-priced jeans can cost the same as four pairs of jeans at the discount store.
If your child is determined to have brand-name clothes that cost a pretty penny, help them learn how to save money for these large purchases. You can offer to pay for half of a new sweater or pair of shoes they want and watch how fast your kid will save their allowance.
Show Them How You Save Money
Talk to your kids about any tips or tricks you use to help you save money. It could be a situation of buying a frozen pizza to cook at home instead of ordering one in or using your library card to read books instead of purchasing them. There are terrific small ways to show your children how to cut costs and save money in several aspects of daily living.
The sooner you get your kids involved in thinking about money, the better off they will be. Teaching your kids about saving money does not have to be complicated, and it can be integrated easily into your daily living. It is never too early to start helping them learn about finances.
Teaching them about finances is not a one-time lesson either. There will be ample opportunities for you to guide them as they grow and mature. When you take the time to educate your children about money, they will be in a better position to make sound financial decisions later in life.