Teaching your kids to save money is an important part of responsible parenting. Many people graduate from high school and college with no concept of how to save money, make investments, or manage their taxes. Although teaching your child about bank loans, investments, debit and credit cards may seem like a little too much, you can start off by teaching them the simple art of saving money.
One might ask what is the right age for children to learn about saving? There are people who say that parents should start teaching their kids about the importance of money as early as age two. Some say that parents should let children be children and not worry about real-life matters, such as finances. While the appropriate age for your child to learn about money may vary, imparting financial knowledge to them is highly important.
You can teach your children to save money at almost any age by utilizing the following techniques:
1. Earning Versus Giving
To help children realize the importance of money and savings, try different types of reward programs to help them earn money to buy the things they want. If they have to earn the money to buy something, they are more likely to understand and appreciate its value. Money in return for mowing the lawn, doing the dishes, cleaning their room, doing the laundry, and other chores, also teaches them the value of working to earn money.
2. Use Jars to Save
A fun way to help your children save money is to use piggy banks or jars. Using clear jars will give them a visual of the money piling up, which might excite them. They can use jars of varying sizes to save money for each item they want to purchase. Using envelopes to save money and draw pictures of how they would like to spend the money on the outside of on the envelope are other ways to teach saving
3. Be An Example
Your children learn watching you. If they see you purchasing excessively, they might think that’s the best way to manage money. Whereas if they see you saving and spending wisely, they will learn the importance of being financially responsible.
4. Open a Savings Account for Them
Open a savings account or a share certificate for your children to help them save. Allow them to make deposits to understand the process. Eventually, they can learn how to read their statements and see how their savings have increased over time. It’s also a great way for them to start learning about earning dividends.
5. Tell Them About Borrowing and Debt
It’s important to teach your children about loans and debt. Loans and credit cards can have great value if used properly, but if managed poorly they can have an adverse impact. When your children are old enough, assist them in getting a loan or a credit card. This way you help them manage, so they learn how to build credit without building excessive debt.
6. Talk to Them
Have conversations with your children about the advantages of savings. Teach them what how to build their wealth, why it’s beneficial to start as early as possible, and the best ways to “invest” their money. Help them understand the importance of good financial management early in their lives to build a good foundation for future financial decisions.
Tips To Educating Your Children About Saving