Getting into the habit of saving money can be the most important financial habit that you can get into in your lifetime. The earlier you get into the habit, the better it is for you. The important thing about saving money is to do it automatically, without any effort. It needs proper planning and applying strategies, you can’t just hope that you’ll have money left over at the end of the month, automatically. There are many tricks to it, and in order for your tricks and plans to work, you need to put saving money at the top of your list.
We all know the famous quote from one of the founding fathers of the United States – “A penny saved is a penny earned.” Even though parents get wiser as they get older, children often don’t understand the value of saving. They tend to spend money as quickly as they can. There are only a small percentage of children who save their money instead of spending it as soon as they get it.
5 tips for all parents to help kids save money
Being a parent is not easy and you have learned the hard way the value of saving money for rainy days. It is also your responsibility to teach your children about the importance of saving money, just as you would teach them about all other valuable lessons and life skills. Here are the five tips you should teach your children about saving.
1. Talk about your own financial habits
Most children don’t understand the value of saving money because parents don’t always talk to them about their own financial habits. Very few children today understand how money works. Dr. Lynsey Romo, an assistant Professor of Communications at NC State, conducted a study with 136 children between the ages of 8 and 17. Most children reported that subjects like parental earning, debt, investments, and family finances were “off limits”. Even though parents were talking about saving and spending, it was basically for preparing their children for the future. Children didn’t understand why parents didn’t want to talk about these topics. Some children had come to their own conclusion that parents did not want to “scare them” with these topics.
When children grow older, they will eventually learn about money. However, teaching them about money yourself will make a much better impression on them and make them more prepared. They will not grow up with any misconceptions.
2. Make your children earn their money
Teach them budgeting and the value of working hard for money from a very early age. Children as young as 2 years old can understand chores and earning. Think of making them do little chores, like letting them pick up their toys or put their plastic plates under the sink to earn a treat. You may want to start giving them an allowance at the age of 5 when they will really start to understand money management and budgeting. Encourage your children to do chores around the house to understand the value of working hard for their money. Your children will understand organizing and budgeting money very easily. It’s a great way to teach kids about the basics of money.
When children work hard to earn their money, they will grow up with more respect for the value of their own property, as well as for the value of other people’s property. They will grow up caring about things instead of just wanting to acquire more toys.
3. Teach them about financing
If your child wants a toy that costs $25, and he only makes $5 a week, make him wait 5 weeks before he can get that toy. This will make him understand that different toys may cost more, even though he may not understand the value of a dollar yet. He can still understand that he needs to save his earnings for 5 weeks in order to get a more expensive toy. Compare toys of different prices at the toy store and explain to him about different price ranges. You might have to remind him and encourage him to understand and grasp the idea of saving. One tangible way of showing it, is to use a glass jar for saving. Each week you could act as a banker and put your child’s money in the jar. Keep an account and show him how much more he needs to save in order to get the toy.
4. Set an example
Action speaks louder than words. Most children grow up following and emulating their parents. Set up your own saving jar to show your children how much you are saving every week. They are more likely to learn from your actions, than your words, especially when they grow up to be teenagers. So, if you show them that you are saving, as well as they are, then they will also be encouraged to save money. However, don’t allow your child to dip into their emergency savings. Talk to your children about financial matters, especially as they start to get older.
5. Make saving money fun
Children will find it more interesting when they have fun saving money. You can make charts, and accounts that allow them to see how much they are earning and saving. They will be more encouraged and understand the value of saving when they see their money accumulating every time they make a deposit by setting a part of their earnings aside. It is a good way to teach them about accounting as well.
These tips will definitely give your children a good start in under standing money, finances, and savings. As they grow older, they will need to learn in more detail about money. The more they understand money, the more they will be encouraged to work hard for their rewards; they will understand and respect the value of money and property. They will also be more encouraged to save.
P.S: – Do you have some suggestions? Please add your own methods in the comment box below.
Source:Balanced Life Team