We don’t have a kid, not yet. But, ever since I visited the site money as you grow, I was thinking of writing something around it. It’s so important to impart early financial lessons on your kids! This site is promoted by federal govt. If you are a parent and want to start teaching money to your kid, you can start with this very simple and powerful site.
Although I don’t have a child, that shouldn’t stop my thought process on educating kids about money so that they can be financially responsible with money when they grow up. It’s so important in today’s Topsy-Turvy economy. I wrote about the importance of teaching personal finance early before, I also mentioned how you can use garage sells as money lessons for your kid.
This article is about ways to teach them the importance of saving money, which is the first step before you teach the concept of credit to them.
Parents have a lot of responsibility for their shoulders when it comes to teaching their kids about the different aspects of life. One of these aspects is teaching them about the importance of money – how saving and spending wisely are absolutely necessary.
Kids come to know about money at a very young age because of the fact that they assist their parents to the many shopping trips to grocery stores. Since children are keen observers, they can perceive that money is used to get goods in return and it is something that is kept hidden inside the purse.
They learn that money is kept safely and is not something that you find lying around on the carpet or over the furniture.
All the concealment and secrecy develops a sense of curiosity in them; which is why they would start asking about it from a very young age and would want to have some of their own so that they could impersonate their parents and other elders. Kids pick up a lot from their parents and it is because of this reason that the parents are referred to as the number one role models of the children’s life.
Therefore, the children would very naturally develop the feeling of having their own money kept safe somewhere like a drawer or a wallet. This is the perfect age that you could start developing a saving mentality in your child.
When my daughter turned 5, I gave her two jars labeled “Saving” and “Spending.” I explained to her that every time she received money, she should first put at least 10% into the “saving” jar. When she put money in saving, she was not to spend it on something spur of the moment, and she learned to save for “a rainy day” or any special expenditure. This simple system has had excellent results letting her adopt saving mentality.
There are a lot of other ways to develop a healthy habit of saving money in your child. In this article are listed some of them.
Start Offering Your Kids Pocket Money and Teach Them To Save
If you see that your child is going through a phase where he/she is showing an increasing interest in money then it is about time that you should offer him/her some pocket change that he/she can call his/her own. What you need to be careful about is that you should always start from a modest amount. It shouldn’t matter if you could afford to give your child a lot more; you shouldn’t.
At this young age, your child doesn’t need to buy something off a necessity; he merely needs it to learn about the value of money and when is the right time to spend it. Once you give him/her the money, make sure you advise him to keep it somewhere safe and not to be careless about it; state a time period in which he has to spend it and before which he will not be getting more.
Assign a Goal To Save Money For
Once your child learns how to spend, he will have to be taught how to save. And the best way to do that, as explained by the experts, is to ask him to have a goal, something he has meant to buy for a long time. You can assert the importance of buying the thing himself so that he develops more value of it.
Once he knows that he is not going to be funded more than his pocket-money, he is going to learn to save for it. And this technique is also going to develop a sense of prioritizing one thing over the other. He will learn to curb the other minor desires to make room for the greater achievements.
Teaching The Difference Between Saving and Over-saving
Not all children are the same and they will develop varying approaches towards saving of money. Where one child might like to spend on everything he sets his eyes on and occasionally save for something important, there might be others who confine the desire of spending at all in order to save for something indefinite.
These kids don’t know what exactly they are saving for; all they know is that they like the idea of having a lot of money saved up and it doesn’t matter if they spend it or not.
This matter, therefore, should be handled delicately by the parents. The parents can tell them that it is good that they have developed the habit of saving but that it is equally important they keep on spending to make room for more. As a parent, one should teach these kids, to keep a percentage of their pocket-money in a separate place to save and that they should spend the rest. This way, children are going to learn both how to spend and how to save from their own money.
Teach Them About Earning Money
Once kids become teenagers, they can be taught another aspect of money and that is that money is always earned in life against something they do and is not handed over. Parents should encourage kids to earn money, so that they learn the real value of money and how important it is to not spend it recklessly.
Of course at this age they cannot work in offices or in garages, so parents can offer them money for doing a chore of the house like clearing up the leaves from the garden. Once they learn about making money with their own effort, they would have a much better value for money and thus develop a saving mentality.
Babies won’t learn to walk if we carry them all the time, kids won’t develop healthy muscles if we always lift for them. Children’s knowledge is first learned at home, where their characters are built and future attitudes are forged. As parents, we should let our children realize the value of money and the benefits of saving at an early stage of life. To let them develop the mentality of saving by using some smart educational techniques will benefit them for life.
Readers, can you share your experience of teaching money to your child? When did you start and how the things went? If your kid is still little enough, what’s your plan to teach money? Remember personal finance is not taught in schools!