It is never too early to teach your children about money. Below are some tips that could not only help your children learn the value of money, but you will also find some tips that could help your kids begin saving, and potentially make smart investments in the future.
The Importance of Saving
When children are between the ages of three and five, the concept of sharing is something most parents teach them, as well as right from wrong. During these lessons, you may have told your child “no” about a certain toy, touching an item, or performing some other type of action. It is equally important to teach your children that they need to save money, as well as the importance of spending money wisely. Some tips to use in order to teach these lessons include:
- Labeling jars with the words “Saving” or “Spending”
- Set goals – Teach your child how to save enough money to purchase a toy that she or he has been wanting
- Discuss the importance of waiting for something that you truly want – Do this while you are waiting in some type of line (grocery store, at the park, etc…)
Teach Children how to Count
When your child learns how to count, make sure you encourage her to save. Place the money in a jar, and each time she/he adds funds to the jar or piggy bank, count the money, and help her learn how much her savings has increased. This could also coincide with goal-setting. Perhaps she/he is saving for a big toy; help her count the money and determine how much more she/he needs to make the purchase. This teaches the importance of saving, as well as patience.
Open a Savings Account
As your child reaches a certain age, or level of maturity, it is a good idea to open a savings account for him. If you have multiple children within your home, it is a great idea to open each child an individual account so that they can accurately track their contributions. The savings account allows them to learn how to save money without the desire to spend it; you are also allowing them to see how their money can grow safely through a financial institution.
Another tip is to reward your children when they do not spend the money in their savings accounts or piggy banks. Perhaps you could buy them a toy, or give them more money to put towards purchasing the item on their “goal list.”
Other Helpful Tips
Give your children an allowance for doing work around the home; even if they perform simple chores. You are teaching good work ethic and rewarding them with compensation for completing a job.
Give allowances out in smaller amounts. For instance, give them ten, one-dollar bills instead of a ten dollar bill. Advise your child to save some of those bills instead of spending it immediately.
When you give your child an allowance, charging interest as if it was a loan could illustrate to your children why it is important to save money to make purchases instead of using a credit card.
Leading by example is one of the best ways to teach your children how to save money. This could be anything from turning off lights and televisions that are not being used to show the importance of saving money with utility bills. As you do this, make sure you explain to your child why you are doing so.
Regardless of the methods, the important thing is to teach your children how to save money. Start teaching your children to save money from an early age and if you continue to help them learn as they grow, it will be a practice they will continue through their adulthood.