The Best Ways To Teach Your Kid How To Save Money
Saving money can be one of the hardest parts of being an adult. Having enough money to pay your bills and expenses is rough enough as it is, so when you get a little extra cash, it’s hard to not spend it on fun stuff. When you’re a kid, that’s all you get to do with your money! So once you become an adult, it’s hard to know when to cut back on the fun and start filling in on the savings. The best method to becoming a good saver is to start as early as possible. It’s important to raise kids to learn how to be responsible, especially with money. Here are the top tips for teaching your kids how to become responsible junior money managers. Always remember, #1 is the most important!
Set A Good Example
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The best method for kids to learn is to actually see the good behaviors that their parents have. If you don’t have good habits of your own, at least make sure your kids can’t see the destructive behavior. This means no impulse purchasing in front of them, and only showing them you’re purchasing the things they need. This is tough, but we’ve got plenty of other easy tips on the rest of the list!
Let Them Make Mistakes
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The easiest way for kids to learn, and a way to make sure those lessons stick, is to let them learn from their own mistakes. It’s ok if they decide to make a foolish financial purchase. When they’re still kids, they’ll have you to fall back on. That might not be the case if they make a financial mistake in their adulthood…
Use Things Other Than Money
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Even in our adult lives, it can seem a little impossible to fully understand every aspect of the financial world. We have enough trouble as it is reading our credit card statements. This means that kids are going to have a much tougher time understanding money. A trick to use when they’re kids is to find something they enjoy and use it as currency. For example, you could give them M&Ms for doing chores. This tip will come in handy later…
Teach Them To Wait
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One good rule that we could even follow as adults, is to teach them the 24-hour rule. Impulse purchases can really hold us back financially and cause us to have serious buyer’s remorse. Teach kids at an early age to wait at least 24 hours before making any big financial decision. This gives them time to really think about their decisions and usually talk themselves out of it, leading to more savings.
Put Them In Debt (With You)
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You never really understand how challenging being in debt can be until you’re already in it. We can tell kids to be responsible enough, but as soon as they turn 18, they still might be tempted to open a ton of credit cards. In order to prevent this, start a system to put them in debt with you. Maybe they want to buy an expensive toy. Tell them you’ll pay for it now, but they have to pay you back with interest. A lot of kids lose interest in their toys after a while, so this will help them realize that it’s never really worth it to go into massive debt. This isn’t the only tip on the list that seems a little strange…
They Have To Work For It
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You can’t ever appreciate the value of a dollar until you have to work for it. A lot of teens and young adults work for hourly jobs, so it’s a good idea to make kids clean or complete chores for a certain amount an hour. This will let them realize that sometimes a soda and a candy bar means half an hour of work. Soon, they’ll appreciate money more and want to spend it less.
The Sooner They Get A Job, The Better
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While it’s important to be a kid, it’s also important to remember that we’re pretty much going to have to work at a job forever. Even if young teens don’t need a job for financial reasons, employment is still a great tool that teaches all sorts of different types of responsibility. Even having kids work for you is a great way to build a strong work ethic.
Stress Charity
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Once your kid starts making money, they might become used to the idea and comfortable with their saving and spending. When you have enough money, you start to lose the appreciation of it. It’s good to remind kids that they should still consider those less fortunate than they are, and donate to charities when possible. This improves their morals as well, so it’s a win-win!
Make Them Conduct Their Own Transactions
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Your kid may have a piggy bank full of money, but they might still not grasp the concept if you keep doing the transactions for them. When you go to a store, it’s good to get kids started early paying for things themselves. This helps put them more in charge of their own financial responsibility and gives them a chance to understand our economic system at its smallest point.
Have A Visual Saver
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Even though a lot of us don’t carry cash nowadays, it’s still important for children to have a visual perspective on money. Having a clear jar to store change in is a great way for kids to really see how much they’re earning, saving, and spending. It’ll come in handy later for when they have to start checking their bank account on their phones and computers.
Help Them Section Off Money
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Even further than just using a piggy bank or jar, your kid should be organizing money into different categories. Using envelopes or multiple jars can help with this. Sit down with them to determine what they want to use their money for, such as savings, fun, food, and charity. Then they can put whatever amount they want into the envelopes and really start to visualize an actual savings account.
Make A Goals Chart
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In our adult lives, we have financial goals. Maybe we’re saving to buy a new house, car, or plan a family. When you’re a kid, you don’t quite have these goals yet, but you probably still have some goals. Sit down with your kid and find something that they want… maybe a new toy or game. Then help them figure out how much money they need to be saving and making from chores. This will help them in the future when it comes time for real purchases.
Reward For Saving
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Saving pays off big time in our adult lives. We’re lucky enough to be able to invest our money and grow it, so kids should too! Remember to always give your child financial freedom and the ability to make their own decisions because learning from their mistakes is important. But if your child chooses to save their money, they should be rewarded so that they know this is the best option. It especially pays off if they have siblings with different spending habits!
Offer A Savings Match
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In our adult life, we won’t get opportunities like this, but kids still deserve to have fun. If your child really has trouble saving, it might be a good idea to offer a savings match. This means that once they reach a certain amount in their savings, maybe $100.00, you offer to double it if they keep it that way for a certain amount of time, maybe a month. This gives them a big reward and teaches them that it really pays to save, as well as showing them how to manage on a low budget.
Don’t Share Stresses
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Kids have the rest of their lives to stress out about money, so don’t make saving and spending a stressful thing right now. It’s also important to teach them that even if they’re in a financially stressful situation, it’s nothing worth losing sleep over and making their health worse. Instead of letting your kid feel the anxiety of being broke, teach them how to maintain a financially responsible lifestyle in all situations.
But Share Experiences
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The more open you are with your child, the better understanding they’ll have about real financial matters. So if you’re using M&Ms as currency, compare this to the hourly salary you make. You don’t have to reveal every aspect of your situation, especially if it might cause your child stress. But always be ready to listen when they have a question.
Remind Them To Prioritize
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It can be easy to remember what’s most important when it comes to our money. Even though children don’t have bills to pay, it’s vital to remind them to always remember what’s important. This goes back to the idea of using multiple envelopes and jars. Maybe number them from least to most important. Remind children to always make sure that envelope number 1 and 2 are full before they decide to add money to envelope 3, for example.
Play Games
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Money is stressful. Making it isn’t always fun, and even spending it can be difficult. Kids shouldn’t have to deal with this burden all their life, so try to play games with them! There are plenty of board games and computer games that teach your children to be financially responsible. This also helps ease the stress of financial problems.
Teach Them How To Shop
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You can be the best person in the world at saving your money, but if you don’t know how to be a frugal shopper, that might not matter. It’s important to take your children shopping with you so they can learn how to responsibly spend money. When they see you making smart choices, they’ll make the same decisions when they’re older.
Always Remind Them Money Isn’t The Most Important Thing
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Even though you should get started early on teaching your child to be responsible, it’s important to always remind them that there’s much more to life than money. Don’t get caught up on the subject and remember to still have fun with them, play with them, and even spoil them with your own money. They have the rest of their lives to make financial decisions, but they’re only kids for so long.
