Saving money is one of the most important aspects of building wealth and having a secure financial foundation. There are ways to empower the next generation with sound financial advice, and that starts by teaching children the importance of saving from a young age. If you are a parent, here are 5 ways to teach your children about saving money.
START WITH AN ALLOWANCE. Giving a child an allowance, even a small one, empowers them to start making choices about the money that they earn. Make them understand that receiving an allowance is their opportunity to save up for things they want. Consider giving your children weekly or monthly allowances starting as young as kindergarten.
USE SAVINGS JAR. When your kids really want a new toy or trendy clothes, let them know they will have to save up for it. Give them a jar for each of their desired purchases and allot their allowance in a denomination that encourages savings. For example, if you give your child five dollars a week, give it to them in one dollar bills. They can save all their cash for one purchase, or they can contribute to different “jars” for various savings goals.
CREATE A TIMELINE. Create a timeline so that your child can visualize when they will reach their goal. Let’s say you give them five dollars a week and they want to save up fifty dollars. If they saved one hundred percent of their allowance, they’d reach their goal in ten weeks, or roughly three months. Having a chart that they can mark off as they get close to their goals will help them understand how long it takes to save up for special purchases.
LEAD BY EXAMPLE. Children learn by example, so the best way to teach your child about saving money is to save money yourself. Have your own jar of money that you put funds in regularly. When you’re out shopping, show your children how to discern between various prices and explain why buying one item makes better sense than another.
TALK ABOUT IT. One of the most important things you can do is to have open conversations about money and the importance of saving. Money doesn’t have to be scary or a taboo. An innocent question such as “Are we rich?” can be answered in a way that emphasizes family values, such as hard work and responsible spending.
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