A lot of children receive monthly allowances, but do they know what to do with them? Here are some tips for teaching children how to save money. If you’re looking for online resources, check out the American Financial Association’s “Teaching Kids to Save” section. For a classic book on the subject, try Thomas Stanley’s “The Millionaire Next Door,” which includes a lot of useful tips on saving and investing money.
The importance of giving financial literacy to a child cannot be stressed enough. Children may not understand the real value of money yet, but it is never too early to instill good money habits in them. The earlier you start, the better. Here are some great tips on how to teach your children the value of saving money.
- Teach them the difference between Wants vs. Needs
Children are expensive, and it is a fact of life that they will require a financial investment to reach adulthood. While it is true that children are a gift from God and a blessing to any family, it is also a fact that children are expensive. Many people believe the best way to save money is to teach their children about needs and wants. They believe that children will spend less if they can tell the difference between a want and a need.
- Let the children learn how to earn
Giving children an allowance for chores is the most common way to teach them about earning money. Children should be expected to do at least three chores each week, including cleaning their rooms, doing the dishes, and helping with yard work. They can be paid an allowance for chores they do beyond that as well as for doing chores over and above what they are expected to do, but allowance should be earned, not expected.
- Give a saving goal
One of the most important lessons you can teach your child is how to manage their money. While you can take them to the bank or talk to them about the importance of saving, there are easier ways to teach your child how to be smart with their money. By setting up a savings account for them, you can help them to learn the value of saving for specific goals.
Many people do not have a savings goal, and we will answer why it is important to have one. For starters, it is good to have a goal to save because it forces you to look at your finances and where you want to be financial. If you do not set a goal, you will never know if you have met or exceeded it. Secondly, it keeps you focused on your savings. When saving becomes a goal, it becomes more fun. Saving is not something people look forward to, but it is a lot more fun when it is a goal.
- Give a place to save
Adults can be hard to talk to about certain subjects. It is much easier, for example, to ask your child’s teacher, or your pediatrician, for advice on your child’s health rather than asking your friends. Many parents feel like they have to handle their kids’ money situations themselves. That’s one of the biggest mistakes you can make. Take advantage of the fact that kids are more likely to listen to and learn from their parents than to listen to friends. If you can show your child, through your actions and words, that you are saving for the future, your child will learn to save money the same way.
- Let them track the spending
It’s never too early to start teaching your kids about money. If they get into the habit of thinking about how they spend their money, and they save some of it, too, it will pay off for them later in life. They’ll be able to make a lot more of their money work for them.
As a kid, what was your favorite age to be? You may have had a variety of answers – as a toddler, you could run around and play as much as you wanted. As a school-aged child, you could go to after-school activities with your friends. And maybe you found yourself having a blast at parties and sleepovers in your teen years. However, chances are, you also have fond memories of youthful summers, as well as the freedom of being a kid.