Tips on Teaching Kids to Save Money
18 Oct, 2018 / By Jennifer Hamilton
It is really important that children learn how to handle money. If they can learn lessons as a child, then they will be able to use this good financial education when they have their own household to run. There are things that you can do to help them to understand about saving money.
Give Them Pocket Money
Some people may think that giving children pocket money will just encourage them to spend. However, if they never have money to spend, they will never start to understand about how much things cost. Even if they are just learning that sweets are cheaper than comics which are cheaper than toys, it is giving them some financial education. It will give them the ability to spend money and save money and they start to understand the importance and risks of both.
They may make mistakes, by spending money on things that they do not really want and then not have enough to spend on the things they really do want. This will teach them at a young age that they cannot have everything that they want and if they are unwise with spending, they will have to go without or wait for the things that they want.
Teach Them Money Math
Math can be a subject at school that many children and their parents do not like. However, understanding money math is very important. It is quite simple really. You just need to show them about buying things and getting change and adding up the costs of things. Once they are old enough to understand the basics you can give them math examples with a shopping list and a budget and let them work out how many things you can buy with it. See whether they can make sensible choices. You can also let them help you with making choices at the supermarket.
Get Them a Bank Account
Giving children a bank account will let them understand what it means to save money. They will be able to put money in and take it out and find out what this is like. They will also be able to get an understanding of what it is like to get interest on money. You can explain to them how the bank is using their money to loan to other people and in return is giving them interest on that money. This should help them to start to understand about saving and lending and give them an idea of how good it feels when you receive interest on your money.
Show Them Good Examples
If they can see that you are saving up to buy things and not getting in to debt, then it will give them a good example to follow. Children are very easily influenced and so if you can give them a good grounding in financial education when they are young, then they should be able to manage money better when they are older. Seeing how good things can be if money is managed properly, can help them to realize how good it is to be debt free.
It is not always easy to set a good example and some parents think that children can learn from their mistakes. This is not the case though as children will copy the behavior that they see and repeat the mistakes. Therefore setting a good example is much better. If you are in debt explain to them why this is a bad thing and show them why it has made things less good for you. Explain to them how much the debt is costing you and what you have to sacrifice in order to come up with the money to pay back the debt.