Teaching your child about money is a valuable tool that will serve and empower them throughout their life. Kids look to their parents for money matters, but oftentimes parents are at a loss knowing what to teach their kids or how to go about it.
Here are some helpful tips that will make saving fun and rewarding for your child.
Communicate with your child your values concerning money – how and why you save, choices you’ve made to make your money grow, and how you spend it wisely. A good example of this is when you’re in the grocery store and you choose items on sale versus regular priced items. Or choosing generic brands instead of the more expensive brands.
Help your child learn the difference between wants and needs – this is really key for teaching your kids good decision making. Needs are those things that support your life (home, electricity, food, etc.) and wants are things we would like to have but can live without (fancy cars and restaurants, the latest in electronic gadgets, etc.)
Set Goals with Your Child – Help your child set goals for things they want or might need. Help them consider something to save for, like a bike or Xbox game, or their own spending money for an upcoming trip. Instill the idea that they always want to leave money in their savings account for other things that come up that they haven’t thought of. When your child asks you to buy something for them, use it as an opportunity to teach them how they can buy it by setting a goal and saving their money.
Consider encouraging your child to save by matching the amount they save, or telling them if they save for the whole amount, you will pay for half so the other half can stay in their savings account. This helps them stay on track and also creates excitement.
Open a Savings Account for Your Child – and be sure to take them with you when you do! It makes them feel important and empowered.
Teach Your Child to Save, Share and Spend – One of the joys of money is that you can share it by donating to charity or causes. By teaching your child to share they will have a balanced view of money and its ability to help others plus they’ll feel good about themself. When you open a BECU Early Saver Savings Account for your child, they will receive a Savertooth Money Box that is ideal for this. It has three compartments: saving, sharing, and spending.
Allowance and Decision Making – If your child receives an allowance, pay it in smaller bills to encourage and make it easier for them to save a portion of the allowance. For example, if the amount is $5, give five $1 bills so some of the money can be set aside for savings. This way your child can easily set aside $1 for savings and have $4 to share and spend. A good rule of thumb is to save at least 10%. That rules applies to adults too!
Spending Decisions – Let your child learn from their spending choices, good or poor. Before spending takes place you can initiate an open discussion of spending pros and cons. One way to do this is to provide your child with alternative choices when they want to buy something. For example, if your child wants to buy a football for $20, you could also point out to them that the same $20 could buy movie tickets and popcorn, or a helmet for their bicycle. This teaches your child to think about choices and how to make decisions.
Keep Good Money Records – Another important skill for kids to learn is to keep track of their money! Teach your child to keep receipts so they can see what they have been able to purchase with their money. Review their savings account statements with them, show them how they are earning interest, and show them how to add deposits and subtract withdrawals in their savings register.