Teaching your children the value of saving money can be challenging because saving is a tall task, even for adults. For instance, 63 percent of the working population in the United States live paycheck to paycheck, making it difficult for children to emulate the savings culture.
Psychologically, most parents think that money matters and saving are subjects too hard for kids to understand. The truth is, it’s never too early to teach your kids to save and spend responsibly.
There are many ways to teach your children about money, such as having a budget and sticking to it, setting realistic goals, learning to distinguish needs versus wants, and offering saving incentives, so their money can grow.
6 tips for teaching your children the art of saving
1. Start early
It is essential to start teaching your children the importance of money as early as 3-4 years old. As soon as they start counting, try introducing the idea of money and that things such as toys cost money.
Money conversations will not be a one-time lesson. It would be best if you did it repeatedly until your children were old enough to understand money fully. One of the best ways to get them to understand is by including them in the family’s immediate financial decisions.
Take your children to the grocery store or supermarket, have them check out the prices of items, and ask them to help you choose the most affordable product according to your budget. You can also take them to the bank and let them learn how it works.
2. Set realistic saving goals
Saving goals can be short-term, medium-term, or long-term and can always be adjusted according to your family’s needs. Understanding your child’s needs will be a gateway to setting achievable saving goals for your children.
Saving nurtures patience. Teaching your children about saving for a short-term goal, such as buying a new toy or a pair of shoes, teaches them to be patient. This will also help them understand that it will take time to put money together to get what they want.
3. Provide a saving platform
Provide a secure place for your children to put their money. For preschoolers, a piggy bank can serve the purpose. However, for older children who understand the money-saving concept, most banks nowadays offer junior accounts that parents can monitor.
You can also provide a transparent container where your children can watch their money grow. The little efforts motivate them to do more.
4. Give incentives
Acknowledging savings milestones your children reach can motivate them to do more. Just as adults are attracted to retirement saving plans offering higher interest rates, children love to be acknowledged and compensated when they hit a saving goal or achieve a certain milestone.
For example, you can offer to double their savings or top up their savings so they can buy an item they’ve been saving for.
5. Give them an allowance
Make sure your children understand that allowances are not freebies; they should earn them. Give them money for completing tasks, achieving good grades at school, being kind to others, or being respectful to the elderly. Let them know that money is earned, and to earn it, one should work for it.
Allow your children full control over their allowances, as this will cultivate a sense of responsibility and improve their decision-making skills. You should only guide and correct them when they go wrong.
6. Teach them to prioritize
Since they are children, after all, it might be hard for them to distinguish between needs and wants. Help them understand that needs are basic and wants are just luxuries they can do without, saving their money for something more important.
Teach them that they can go without their weekly treats or that they don’t need designer shoes or clothes, but that they need to focus on saving for food, a mortgage, healthcare, or a college education.
For children to learn and adopt a good saving culture, you need to take the lead as a parent. It might be challenging, but sometimes the trick is just getting started.
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