How To Teach Your Children About Saving
Most of us grew up with zero knowledge about money perhaps because our parents never saw the need to teach us about the basics of finances. Years into our adulthood, we find ourselves burdened by various financial issues, prompting us to hire and consult financial advisors when financial emergencies arise. However, would you want your son or daughter to grow up in the same way? Schools don’t cover the importance of knowing how to handle your finances – how to save properly or grow our wealth. So, instead of leaving them in the dark about money, start inculcating useful habits in your children from a young age.
Teach Them The Difference Between Wants And Needs
It might seem like they are still young for this, but teaching kids about wants vs. needs is absolutely crucial. Tell them the basic needs of our lives – food, shelter, and clothing. And then explain how these should be the priority while wants should take a backseat when it comes to expenses. Teach them that wants are only extra expenditures and show them your own budget in order for them to understand better.
Make Them Earn Money
More and more parents are trying this method – they are making their kids earn their pocket money by making them do chores at home. As soon as they’re at an age where they can do basic chores around the house, try out this method. Start with small tasks and go on to bigger ones as they grow up. This way, they will also learn that money isn’t earned as easily as they thought, that you need to work really hard for it. Did you know that a survey in 2016 found out that kids were earning about $27 a week from their parents? It must have increased by now. Once they start earning, teach them the importance of saving, too. Set saving goals for them and give them some incentive for doing so. For example, if they can save $15 out of $30 every week, then a $60 toy will be theirs by the end of the month.
Give Them A Place To Save
Start by buying an interesting piggy bank for the younger kids. They will love the whole concept and be more eager to save money whenever they can. For the older kids, you can open a savings account for them. That way, they will have the independence to see how much they have saved, and even withdraw when they want to. They can also keep track of their progress over the months. Teach them how to calculate their expenses so that they can find out if they need to save more in order to reach their goal in time.
Give Them Credit
Don’t spoonfeed them too much about their goals and savings, and let them make their own mistakes. Only when they make mistakes will they learn the hard way. This will also give them a chance to hone their critical-thinking skills to solve their problem. If, by any chance, they fail to reach their saving goals, offer them credit, but make sure you add interests when you take the money back in installments. This will teach them that if you don’t save in time, you end up paying more.
Teach Them Where Money Comes From
This is another very important aspect when teaching kids about savings. Most children have no idea where the money comes from — they either see you withdraw from an ATM or assume that it came from the office. Teach them how working hard in their chosen field of an occupation or profession is the key to earning those bucks for their needs. This will not only help them understand the importance of money but also inspire them to work hard and earn their own money.
Lead Them By Example
Finally, be the change you want to see in your kids — lead by example. Kids learn more by watching than by listening. So, don’t tell them what to do and just show them instead. Clear off your debts, and start saving for your retirement, but remember to keep an emergency fund that you might need at any time. Another fun way to save up would be for a family vacation. Put up a fund and ask everyone to contribute there.
They say that teaching someone is the best way to learn as well — whether it’s opening a new perspective on something unknown to you before or honing a matter that you’re already familiar with. Take this opportunity to teach your children that giving is also a part of life, along with earning and spending.
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