Finance Life Hacks

Strategies to make your kids good at saving and spending money

Strategies to make your kids good at saving and spending money - Noteablelists - Money Tips for kids

Saving money is one of the most important aspects of building wealth and having a secure financial foundation.  Yet many of us have learned the importance of saving money through trial and error, and more importantly, experience. In school, we aren’t really taught about the importance of saving and many of us find that as adults, we have to fend for ourselves. But there are ways to empower the next generation, and that starts by teaching children the importance of saving from a young age. By teaching your kids about money, you help them discover the relationships of earning to spending and saving. In doing this, kids begin to understand the value of money. This financial literacy can begin at a young age with simple money concepts such as counting coins and making change for purchases. Older children can learn about savings accounts, balancing a checkbook and creating a personal budget. The key is to teach a concept and let them try, even if it means a little extra time in the toy store while your little one painstakingly counts out coins from the piggy bank. Financial literacy is not part of most public school curriculums at any age and not common in private schools either. However, being educated about money can make a huge difference in the quality of life of your child at every stage in life. It is important that as a parent, you teach your kids good money habits early on as best as you can to help them become self-sufficient and financially well prepared for their futures.

So many adults today would have benefited from financial education earlier on. Getting student loans and not knowing how to balance a bank account or manage money is unfortunately a common problem. This can be overcome however, through a little financial education. You can even make it fun and rewarding.

1. START WITH A PIGGY BANK

A piggy bank can be a great way to teach your kids the importance of saving, while giving them an easy way to do it.  Tell your kids that the goal is to fill up the piggy bank with dollars and coins, until there is no room.  Illustrate that the piggy bank is for saving money for the future and that the more they save, the more their money will grow.

2. OPPORTUNITY COST

In simple terms, is a comparison cost of buying any item compared to another. Give your kid examples of this when he or she wants to buy something so your kid will learn the cost of things and begin making good decisions regarding financial purchases. For a kid, it could be a game he or she wants to buy that you compare to clothing, footwear or anything else in a similar price range. You are essentially giving your kid a budget to work with and encouraging your kid to prioritize expenses. Make it fun and encourage your kid to think and question

3. USE SAVINGS JARS

When your kids really want the latest and greatest toy or a new action figure, let them know they will have to save up for it.  Give them a jar for each of their desired purchases and offer them a small allowance each week in a denomination that encourages savings. For example, if you give your child five dollars a week, give it to them in one dollar bills.  They can save all their cash for one purchase, or they can contribute to different “jars” for various savings goals. To encourage saving up for their short-term goals, put a picture of their desired toy or item on the jar, so they have a visual reminder of what they are working towards.

4. LEAD BY EXAMPLE

Children learn by example, so the best way to teach your child about saving money is to save money yourself.  Have your own jar of money that you put funds in regularly.  When you’re out shopping, show your children how to discern between various prices and explain why buying one item makes better sense than another.

Reiterate the message that every time you get paid, you save a portion of your check to help prepare for the future.

5. STRESS THE IMPORTANCE OF GIVING

Once they start making a little money, be sure you teach them about giving. They can pick a church, charity or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well.

6. BASICS OF BANKING

It always a good idea to teach your child early on in life the basics of banking. It may not be as fun-filled as teaching them how to drive or swim, but it will be beneficial for them. Teach them the rules of safe banking, using a debit card, online transactions, using mobile wallets, and perils of overspending on a credit card. They should also know what must be done in case they lose a debit or credit card.

7. TEACH KIDS MONEY IS EARNED

Children must understand that money is earned. This may be a little difficult to understand, since most children are introduced to the concept of money in the perspective of what they can buy from it, and not where it comes from. In order to make this idea easier to understand, parents should teach their children that they need to earn things that they want, either through helping out inside the house, doing good deeds, or working hard for their grades. It is important to remember that the money earned by the child must be equal to the task they have accomplished. Through this, they will understand that what they earn is of the same value as the effort that they put in.

8. BE OPEN AND TRANSPARENT

Many parents have an instinct of shielding kids from the realities of money. Instead, let them get a taste of what it takes to operate the household. Sharing the utility bill is a great one to start with, because that is one cost that is influenced by both the weather and good daily habits. Show them how things like lowering the thermostat at night and turning off lights and devices when they’re not in use saves money.

9. SPENDING WISELY

Curbing impulse buying goes hand in hand with teaching delayed gratification. Show by example. Before you go shopping, create a budget. Outline what you’re going to buy, what stores you’re going to, and the price range for each item. Then compare prices online and clip coupons together (consider letting your child keep the savings so she sees that bargain-hunting pays). She’ll learn that planning purchases before you buy is the routine.

10. CREDIT CARDS

You’ll also want to explain to your kids about credit card usage and how it can affect almost every aspect of your financial life. You will want to explain what interest rates are and give examples so that your kid is clear on the dangers and how it is easy to get saddled with debt. Many teenagers go on to get credit cards as soon as they are eligible.

The more you can teach your kid about saving, budgeting, smart credit card usage and being eager to work and earn, the more you will succeed in helping them be financially smart and healthy. Show your kids the value of compound interest and how saving early and often can protect their future, give peace of mind and provide financial independence. It is smart to start early on your child’s financial learning for the betterment of both you and your child.

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