Saving money is one of the important things that every parent needs to teach about to their child from an early age. Although many of us have learnt this skill from errors, trials and experience, we can start teaching our kids to help them build a secured and healthy financial base. Read below some simple ways that can help you in teaching your child how to save money responsibly.
Engage your kids in financial discussions
Most of the people do not consider engaging their kids while discussing money matters at home. However, financial experts recommend starting conversations about money with your child once they reach an appropriate level to understand their surroundings. Financial discussions act as a potential teaching technique where kids learn about spending responsibly as well as the value of hard-earned money. Illustrate to them how they can save money from their allowances or find new ways to save for the future.
Gift them a piggy bank
One great way to teach children how to save money is by telling them to fill their piggy bank until there is no room left for more coins or notes. They should learn why saving is important and that the money they will fill in will be used for their future. You can keep gifts for your children once they fill their piggy bank or buy them one with the amount of money collected.
Open a Custodial Bank Account
Once your kids become responsible enough to save money in piggy and make decisions without the need of close supervision, open a custodial bank account under their name. It is never harmful to open a bank account at an early age, so long as you keep a check on it. Although you may ask your child to use your bank account for saving purposes, they might not find interest in it as compared to the account under their own name.
Consider giving commissions instead of allowance
When our kids reach a certain age, we must give them allowances so that they can fulfil their chorus needs or petty wishes. But, giving them commission instead of allowances can be a better option if you want your child to learn about money saving techniques. This will help your child understand the value behind earned money and urge them to spend mindfully.
Give them saving jars
If your child does not seem fascinated to put coins in a piggy bank that is opaque, you can offer them a saving jar where they can see their money grow each day. Offer them small allowances each week to engage in saving and filling the jar. Mark a few lines that will act as a saving goal and once the goal is accomplished, buy them joys or storybooks as demanded.
Become your child’s first creditor
If your child wants to buy something but lacks funds, do not give them beyond your means. Rather you can lend them some money as creditors do and take them back with interest. This will be one lesson that can help your child’s lifetime as they will understand about loans, interest and credit notes through it.
Inform them about the risks of using credit cards
Your child will be bombarded with credit card offers as soon as they turn 18—particularly when they’re in college. They’ll become credit card victims if you haven’t taught them why debt is a bad idea. Keep in mind, it’s up to you to figure out when the best time is to teach them these concepts.
Start giving them a budget to work with.
Show your children how to divide their money between saving, expenditure, and making a donation, in addition to giving them a piggy bank. It will be easier for them to deal with larger sums of money if these habits are instilled in them while they are young. You could perhaps share what percentages you’d recommend they use based on your own budget or set short-term and long-term savings goals.
Teach them about compound interest
Although your child may be too small to learn complicated math, you need to teach them investing and saving strategies to make them responsible money savers. The early you start, the better they will learn about it. Once they learn about compound interest, they will know how banks or creditors charge interest on borrowed or saved money.
Give them opportunities to earn money
Whenever your child has free time, you engage them in play, watching tv or drawing like activities. But when your kids want money, engage them in work where they can earn money. Many kids are considering building ventures these days and making profits. Though, you can start teaching them through small household jobs and provide them with commissions.
Make money saving look like fun
Kids often get attracted to competitions. So, make money-saving an interesting game for them by challenging the amount of money they can save. If they win, give them a bonus or an incentive for the next month. Buy them whatever they seek with the extra money saved to keep them motivated. You can also play monopoly with your kids during free time which shows how to balance saving and spending in a fun-loving way.
Praise your kids for saving but maintain tough love
Use praising and tough love like the two sides of a coin if you seek to instil responsible money-saving skills in your child. If your children had saved and contributed to your household bank, praise them by allowing them to watch tv for some time or offer them their favourite snacks. Alternatively, if they fall short of money to buy stuff, ask them to wait until they save enough instead of giving them the money generously.
Be an example for your kids
One of the simplest ways to teach your child about saving money is by setting an example i.e., saving yourself. Children tend to learn things quickly from example. Have your own jar just like your kid has and put in money every day. When you are going out to buy things, take your children and explain why buying certain things make more sense than others. Tell them why it is important to save for their future studies and if they do not save enough, what will be the repercussions. Although teaching your child about money saving techniques is difficult just like discussing with them about sex, you need to prepare your child for a better future and take heed.