Children need to be taught everything. Absolutely everything. From which shoe goes on which foot to how to flush the toilet, there’s a mountain of knowledge that parents need to pass on to the younger generation. When it comes to money, kids say the funniest things. “Just go to the bank and get more”, is fairly common. And “the cash mo-sheen will give you more money if you press the buttons”. If only things were that simple.
Teaching children about money is made all the more difficult when our own financial situation is far from perfect. For further reading on the matter, using Creditfix can help. However, teach our children about money and saving, we must. Otherwise your 18 year old son or daughter may be stood at the cash mo-sheen wondering why despite their button pressing they aren’t collecting a handsome sum. Here’s what to do.
Step 1: it’s time for a see-through piggy bank
Apparently, clear plastic piggy banks work the kinds of wonders that other piggy banks don’t seem to replicate. Where your child can see their money, day in, day out, sitting there, not getting any more, not getting any less, just sitting there until they have an opportunity to put more in (perhaps some birthday money?), they are far more likely to understand that money is something that takes time to accumulate.
Step 2: next, open up a real savings account
This is the next step in learning about savings, typically for children over the age of 7 or 8 years old. At this age, they can start to appreciate how ‘interest’ can add to their savings. With monthly balance reports and a slow stream of
a small amount of cash adding to their amount from you, your child will be less likely to want to waste their hard earned money on cheap toys and will instead likely prefer to save their cash for something more meaningful. There are a variety of bank accounts for teens and kids to choose from.
Step 3: time to get technical (with a pencil and paper)
For children over the age of 10, you may want to consider introducing the notion of savings goals. Every child wants something. From video games and sporting equipment to arts and craft supplies and everything in between, children are a sinkhole when it comes to ways to spend money. Here’s how it works:
- Encourage your child to make a list of the things they want (see toy ideas).
- Now look up the cost of those items, listening the cheapest first.
- Looking at how much money they are able to save, write down how long each item will take in terms of saving time. Obviously the more expensive items will take longer.
- At this stage, encourage your child to cross off the things they really don’t need or want after all, bearing in mind how long it will take to save for them.
At this point, you have a list of definite ‘wants’ and a timeline to reach their savings goals. With that, you can rest assured that your children understand a little more about how money and savings work.