Teaching kids about money and instilling good financial habits in their money from a young age is a crucial life skill that will help them massively as they get older and have to be more independent. By starting early, you can help your children have a much healthier relationship with money, and ensure you set them up for a financially secure future – if they have that, they’ll be able to do whatever they want in life (within reason, of course). With that in mind, here are a few different strategies to make sure your kids have some great money-saving habits from a young age so they grow up to be financially secure adults. Read on to find out more.
Lead By Example
The last thing you want to try to do when you’re a parent is teaching your kids something, and then you go and do the opposite – if they see that’s happened, they’ll never learn and will constantly question just why it is that they have to do something when you don’t. Since children often do what their parents do over and above what they say, you run the risk of them getting into the same bad habits you have, which is not what you intended when you started to teach them about being financially responsible.
If you can be a good financial role model in your children’s lives and practice responsible money management, they’ll be more inclined to do the same, and to do this, you’ll need to let them in on your own finances a little. Show them how you budget, for example, how you know how much to put into your savings account, why you decided to install energy-efficient devices, and why air source heat pumps can save money on your energy bills (and what energy bills are in the first place). If the money-saving (and spending) decisions you’re making are something you can share with your kids and use to turn into a money management lesson, then that’s precisely what you should do.
Start With A Piggy Bank
The idea of saving money isn’t something that’s always easy to grasp for young kids, which is why it’s often a good idea to start with a piggy bank or some other kind of dedicated savings jar. The great thing about this is that children have an action to take when it comes to saving money – they’ll put their coins into the piggy bank – and that helps them remember to keep doing that every time they have some spare money to save. Plus, they can feel how much they’re saving as the jar gets heavier over time, and they can shake it to hear the money rattling around. When you can include as many of the senses as possible in something, it becomes a lot easier to remember and reinforces the positive aspects of the action, so children are going to want to save even more.
To make things even better, you might want to label the jar or piggy bank with something specific. You could add a label that says, “For a new toy,” or “For a special outing,” and in that way, your children will have something to work towards and a visual (another sense) reminder about what it is.
Give Them Pocket Money
Of course, in order for your child to save money, they’re going to need to have some money to begin with, and that’s where pocket money will be useful. You can’t (or shouldn’t) just give your kids money for no reason, or they’ll never feel the real value of it, and that could actually lead them into difficulties as they get older, as they’ll just spend money without understanding the consequences.
That’s why you need to link their pocket money or allowance to their actions and ensure they understand why they’re getting the money they’re getting each week or month. You might give them a specific amount of money for every kind or helpful deed they do, for every test they pass, and so on. If you add up all the money through the month and then ‘pay’ them at the start of the next month, they’ll need to manage their money carefully to ensure they don’t run out, just like an adult would do. Plus, you can encourage them to put a certain amount of it away into savings. They’ll get a much better understanding of the value of money, and they’ll get into good money habits from a young age.
Teach The Difference Between Need And Want
Something that a lot of adults have trouble understanding is the difference between need and want. They’ll often see something in an ad or a store window or website, and they’ll instantly want it. But that’s not the same as needing it, and although it’s fun to buy something just because you want it sometimes, that’s not a good habit to get into if you want to be careful with your money and save as much as you can.
It’s crucial that you help your children understand this big difference between needing something and wanting something, and to know that they have to prioritize their needs over their wants, even if it’s a hard thing to do (which it often will be). One way to do this is to take them grocery shopping with you. You can show them your shopping list full of things you need for the home, and explain why you have to buy things like food and toiletries, and why you don’t have to buy things like toys and candy, even if you really want to. Ask a question every time they pick something up off a shelf about whether they really need that thing or want it. At first, they’re likely to say they need it all, but over time, they’ll start to get a better understanding of why that’s not actually the case.
Set Savings Goals
It’s great to teach kids how to save by giving them a piggy bank or perhaps opening up a savings account for them (you’ll need to determine what’s best, and if you opt for a savings account, you need to make sure they know about it and contribute to it, otherwise they’re not learning anything from it), but it can be hard to persuade them to keep saving if they don’t have any goals in mind. They’ll be far more tempted to spend their money sooner rather than later if they’re not actually saving up for something specific, just like anyone would be.
Talk to your child about what they really want, and let them come up with an idea. It could be a new bike, it could be a certain type of fashion accessory, it might be a set of books – it really doesn’t matter – it’s the child’s choice – but what does matter is saving for it. Once you know what it is, you can help your child find out how much it is and then set some savings goals.
Once they have these goals in mind, it’s usually a good idea to have a visual representation of how much they’ve saved, like a big chart to stick on the wall that they can color in when they reach a certain milestone, or that they can add a line to each week to see how far they’ve come. Not only will they see how they’re progressing, but they’ll stay motivated because they’ll be getting ever closer to their goals.
