Being able to save money effectively is one of the sure ways to create financial stability and grow your income. More importantly, adults shouldn’t be the only ones meant to adopt this savings habit. As much as you’ve probably learned how to manage finances, it’s important you know how to teach kids to save money.
As a parent, I definitely want to instill the best values in my kids. I want them to be educated, hardworking, skilled, and focused. When it comes to personal finance, I believe my kids have certain things to learn: saving money is one of them.
This post serves as an opportunity for me to show you how to teach kids to save money. You will be acquainted with some of the basic strategies that can help children build a good savings habit. In the nearest future, you will be glad you made this decision.
Is It Good And Necessary To Teach Children To Save Money?
It is necessary that your kids learn to save money while growing up. Kids will one day grow up and become independent adults. By teaching them how to save money, you are helping them prepare for adulthood.
How Do I Motivate My Child To Save Money?
A very good way to motivate your child to save money is by offering incentives. This could mean that for every 10 dollars they save, you give them an extra dollar. This is a compelling strategy that would work for almost any kid.
4 Reasons To Teach Your Kids About Saving Money
Helping your kids build healthy financial habits should be one of your important goals as a parent. Kids should receive financial education just as they receive formal education. Here are 4 unbeatable reasons you must know how to teach kids to save money:
1. Teaching Your Kids To Save Money Helps Them To Build A Good Foundation
There’s no denying that it’s much easier to build habits when you’re quite younger. Some of the things we know how to do well today are things we learned as kids or teenagers. This is why formal education doesn’t begin when you’re 14. As a toddler, one should already be in school.
The essence of early education is to prepare a good foundation for the future. Hence, when you find interesting ways to teach kids to save money, you are indirectly contributing to their financial success in the future. You are helping them lay a solid foundation.
2. Teaching Your Kids To Save Money Instills Good Money Behaviors
There are so many good money behaviors your kids will naturally learn when they start saving money. For example, your kids can learn frugality. By trying to spend less and save money, they will eventually realize why it’s important to be frugal with one’s finances.
Also, your kids can learn how to track their savings goals in their own little way. By dropping 50 cents every day in a piggy bank, every wise kid would know that it takes 10 days to save $5. These are examples of good money habits children adopt when they know how to save.
3. Teaching Your Kids To Save Money Is A Type Of Empowerment
They say, “Knowledge is power”, and that’s something no one can dispute. Giving your kids financial knowledge is some form of empowerment. Knowing how to save, calculate expenses, read price tags, and count change is a basic financial skill that every kid should have. By the time they get into the real world, they are knowledgeable enough to make wise financial decisions.
For example, they would know how to save for big purchases and appreciate the idea of delayed gratification.
4. Teaching Your Kids To Save Money Is For Your Own Benefit
A few years ago, 50 Cent’s oldest son come on social media to complain about not getting enough monthly allowance from his father. Meanwhile, he was getting around $6,700 every month. But unfortunately, he didn’t know how to manage his finances wisely, making him assume that the money isn’t enough.
As a parent who doesn’t want to be in 50 Cent’s position, you have to learn the best ways to teach your kids good money savings habits. It’s for your own good. You wouldn’t want your kids to squander your hard-earned money when they are in high school or college.
10 Tips To Teach Your Child To Save Money
If you want to teach your kids about saving money, here are 10 insightful tips to help you achieve this objective:
1. Explain The Difference Between Wants And Needs
If you must know how to teach kids to save money, you need to help them distinguish between wants and need. We all know that needs include food, shelter, clothing, education, and healthcare. Wants are the trendy sneakers, concert tickets, fancy smartphones, or bicycles.
Spending on your needs gives you the opportunity to manage your financial resources and reach your savings goals. It Is ideal for you to educate your kids on this concept. This is how they begin to learn how to prioritize the right things and spend wisely.
2. Allow Them To Earn Money By Themselves
Encouraging your kids to make their own money doesn’t mean you aren’t financially stable. You could even be a millionaire and still let your kid work. It’s one of the best ways to teach kids to save money.
One good reason why you should let your kids work is that it helps them to recognize how difficult it is to earn wages. Knowing fully well that money isn’t plucked from trees, your kids would instinctively want to save some of their money. You may not even have to try to compel them to develop good savings habits.
3. Create Savings Goals
One of the reliable ways to teach your kids about saving money is to create savings goals. Motivational speakers are right about one thing: you can’t achieve something until you make it a goal.
Here’s the thing. If you want to convince your kids to save money, you have to give them a reason why they should listen to you. This is where creating a goal comes in. As kids, savings goals can range from buying a $50 video game to having the latest wristwatch. When your kids can visualize a goal in front of them, they will be motivated to save money.
On the other hand, creating a goal also means you have to help your kids see how feasible their goals are. They need to be able to set realistic goals. For example, saving $5 every week to purchase an item that costs $30 would take 6 weeks. Kids are supposed to understand this process.
4. Find A Place To Save
Finding a place to save money is key. It’s one of the tips to teach kids to save money. Get a piggy bank, a jar, or a fancy container where your kids can stash their cash daily or weekly. For kids below 10, a piggy bank is ideal. But older kids could get their own savings account set up.
As a parent, you are expected to help them make every deposit until their savings goal is actualized. Notwithstanding, if your kids prefer to have their cash physically with them, then it’s best they use something like a piggy bank to chase their goal. It’s easier for them to monitor their progress when they do this.
5. Show Them How To Track Spending
Gaining control of your spending habit is very important when chasing a savings goal. As a parent trying to figure out how to teach kids to save money, you have to help them track spending. Even though they are still kids, they have to know where their money goes.
Tracking your spending doesn’t always have to be done with a bank or debit card app. You can have your kids track their spending using the old-fashioned way. This means they should write down any purchase they make. At the end of the week, they can examine their expenditure to see if they are spending moderately or not.
6. Offer Incentives
Looking for fun ways to teach kids to save money is important. One of the ways to do this is by offering incentives.
Create some kind of reward that you give to your kids each time they attain a milestone. You could prepare their favorite meal, take them to the movies, or simply give them money as they progress significantly in pursuit of their savings goals. Kids need all the motivation they can get when trying to build a habit. Giving incentives is an effective way to encourage them.
7. Overlook Some Mistakes
Making mistakes is part of being a kid. You can’t expect your kid to possibly manage money like Dave Ramsey. Cut them some slack as they make mistakes. But as part of knowing how to teach your kids about saving, you must always help them learn from these mistakes.
Every mistake made is an opportunity to learn something valuable. When kids understand this, they wouldn’t be devastated by every little financial mistake they make. But most importantly, this is how to teach kids about saving money.
8. Become Their Creditor
Sometimes, kids are not patient. They want things done instantly. If your child wants to purchase something that costs $50, and they don’t have the money, you can offer to lend them the amount. However, they will repay that loan from the allowance you provide. If they work, they pay it off from their paycheck.
Doing this teaches your child a very significant lesson: saving money to buy an item would be much cheaper than borrowing. As an adult, you already know how true this is. You probably use credit cards and have to pay back with interest.
9. Discuss Money
One of the ways you can learn how to teach kids to save money is by talking about money. Discussing money with your kids may seem awkward or embarrassing, but it’s important that you do it.
Encourage your kids to ask questions about money and then try to provide answers to the best of your knowledge. You can do this once a week to educate your kids.
10. Become A Good Role Model
One of the top tips to teach your child to save money is by setting a good example. Some kids see their parents as their role models and are compelled to pick up obvious habits from their parents. If you want your child to be able to save money, you must first know how to save money.
Be in control of your finances. Build an emergency fund, budget your money monthly, cut down unnecessary expenses, and plan toward retirement. These are important steps to take to encourage the habit of saving within your household.
How To Teach Your Child The Value Of Money
Teaching your kids the value of money actually starts with you giving them cash and watching what they end up doing with it. Of course, it’s possible that a kid misuses money the first time he or she gets it. After all, they are inexperienced.
As a parent, however, you are supposed to help your kids see their mistakes as an avenue for learning. For every financial mistake your naive child makes, it’s only right that you teach them the correct thing to do.
On the other hand, if you want to be a little bit tough, you can encourage your child to get a job. This is where things get very practical.
When kids begin to work and earn their own money, they quickly realize what it means to exchange time, skill, and energy for cash. This will help them grasp the concept of money being an invaluable resource.
Quick Summary: How To Teach Your Kids To Save Money
If you want to lay the foundation for a bright financial future for your kids, you have to teach them how to save. Helping your children to build these habits from a young age could possibly prevent them from struggling financially in the future.
This post has discussed some of the best tips for parents who want to know how to teach kids to save money. However, if based on your personal experience, you think there’s something missing in this post, you can address it in the comments. I’ll be more than happy to see your feedback.
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