Teaching Kids How To Save Money
Many middle age parents are still taking care of their children well into their twenties because they failed to prepare them to thrive on their own financially. Their failure to teach their kids to save money has caused them to have to continue to support them as adults. For young parents with little ones, the time to start teaching them about savings is now.
The steps provided below can help them teach their kids to save money.
1. Allowance. When trying to teach kids about saving money start by giving them an allowance for small chores around the house. This helps in two ways; the chores give children responsibility and the money they receive teaches them that for an honest day’s work, they can receive an honest day’s pay. As an added lesson, insist that they put 50% of their allowance in their piggy bank or savings account. This gets them accustomed to saving money on a regular basis.
2. Open A Bank Account. Believe it or not it’s a great idea to open up a savings account for your child as early as possible. Take them on trips to the bank with their allowance, gift money, etc. Once their deposit is made, reward them by taking them to a movie or out for ice cream. This teaches them that there is an added benefit to saving. They will not only learn about saving but, the magic of compounded interest as well. When they grow older and see how much money they have saved; they will thank you for it.
3. Match their savings. To further encourage your children to save money offer to match the amount of money they save. Then sit with them monthly and show them how quickly their money is growing. This type financial reward from you helps to set them up later in life to make additional contributions into their superannuation so that their retirement like their childhood will be a happy one.
4. Family Budgeting. As your kids continue to grow up, include them in family budgeting. Let them play a part in helping to set financial goals for the family to include savings. By making them a part of the conversation, they are more acutely aware of the family’s financial situation. This can be very helpful during tough economic times when you aren’t able to give them some of the items they may need or want. This is the time when you can have them use some of the money they have saved to buy what they need. By making them financially responsible for their needs in tough times; they learn the importance of saving for a rainy day.
5. Make it a Game. When trying to teach kids to save; make it a game that the entire family can play. Use one month out of the year as a Super Saver month. The key is to see how little the family can spend during this month. The goal is to save as much as possible. This means the kids must save as much of their allowances and gift monies as well during this time. At the end of the month, the family should have saved a sizeable amount. After the game is over place half of the money in savings and use the other half to do something special for the whole family in celebration of their discipline.
The road to raising financially independent adults is to start them down the path to savings as kids. By giving them an allowance, opening a bank account, matching their savings, making them a part of the family budget, and using games to teach them; they will transition from successful young savers to financially successful adults.