Teaching kids how to save money has always been important to me. I have always been a saver. Thanks to my parents, they taught me the basics at a young age. That’s why I strongly believe in the importance of teaching kids about money at an early age. I still remember the day my dad sat me down and showed me their bank account statement.
He taught me the importance of saving money by showing me how it actually works. And if it weren’t for my parents doing that, I wouldn’t be the person I am today when it comes to personal finance. That lesson always stuck with me and I have only become a better saver because of it. Here are tips on how to teach your child to save money.
1. Discuss Wants vs. Needs
It’s important to teach your kids that the hot new video game they want is a luxury and that the food they eat every day is a need. They shouldn’t be spoiled and not realize the importance of a dollar so they don’t waste money. Needs are a roof over their head, a warm bed at night, food, water, and a loving family. Wants are that shiny new bike, video games, or the latest tablet or smartphone
2. Let Them Earn Their Own Money
Chores will play a big role in letting your kids earn their own money. In case you forgot, there usually is no free lunch. So if they want a new toy or electronic, have them clean up around the house, take out the trash, or even help with dinner. This will instill the value of money and let them know how important it is to work in order to attain money. So next time Christmas rolls around and they get their Christmas gifts they will realize how much hard work it took to get those.
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3. Set Savings Goals
Learning to save money at a young age is such an important thing to learn for them. Letting your children store their money in savings account would ideally be the best route to take. You can set a savings goal of $100 for a brand new bike they want, and if they have an allowance of $10 a week, teach them how long it would take to reach that goal.
4. Provide a Place to Save
Your kid needs a place to save their money — and it can be better than a piggy bank (unless they are younger). There are savings accounts or checking accounts for children that can really help them learn more about saving money. If they have a tablet or smartphone they can see how much money is adding up each time they save. You can even teach them about money saving apps to help them learn more ways to save.
5. Leave Room for Mistakes
Just remember that kids aren’t perfect, they are learning things for the first time so they won’t always make smart financial moves as a child. And they won’t really understand the value of money and the value of saving from the beginning. However, with patience and the right teaching style, the insights will trickle down to your little one.
6. Talk About Money
Simply talk about money. Teach them about banks, how to save, ways to earn extra money as a child, how to budget, the stock market, saving for college, and how the economy works. Sure, you may not be a personal finance expert, but you probably know enough to teach them the basics to start.
7. Teach Them About Investing
If you really wanted them to learn about personal finance then investing would be a smart route to take. You could open a brokerage account in your own name and place the money they saved in the account and work with them and teach them about trading stocks. While this may take more time to learn, it will have a lasting effect on your child’s future. What kid in middle school knows how to invest (I sure didn’t).
The Value of Money and Personal Finance
Which leads me to my topic; how important it is for schools and parents to teach kids how to save money and personal finance at a young age. Why?
I look around me. I see some people and how they have no idea what their future will look like when it comes to their finances or how important it is to save money. All they are concerned with is the ‘now’.
This usually encompasses things such as:
- Where they want to go eat
- Where they want to vacation in a few months
- Buying the top of the line car and financing it
The list goes on.
I have talked to some of these individuals and they don’t have any long-term plans for their savings account and I can’t understand why.
I am all about enjoying your life and checking things off your list but there needs to be a balance. You need to save a certain percentage of your money and can use budgeting apps to help you save money on food, outings, travel and anything else you want.
My passion personally lies with personal fitness but I think that fitness and finance are so closely linked. I make a conscious decision to workout and use apps that pay to me stay fit every day.
I have goals I want to achieve and I need to put in the effort to get there. Just like how I make a decision to save most of my money every month. My husband and I have a set amount we HAVE to save.
If that means we skip date night one month, then that is okay. We know what we need to do to make better decisions with our finances and we are okay sacrificing the things we want.
The Importance of Teaching Kids How To Save Money
I will share some reasons why the education system should teach kids about money. It is important for our educational system to teach young generations how they can become successful adults.
These kids will grow up learning how to properly save money and put a large down payment on their first home, how to incorporate a 401K into their savings, and how to better prepare for their future.
North America needs to foster these children to think of their future. Freedom means not living pay check to pay check and being in debt. A favorite quote by Dave Ramsey that sticks with me is:
If you don’t teach your kids how to manage money, somebody else will. And that’s not a risk you want to take. -Dave Ramsey
Just like personal fitness, it may be hard at first to give up indulgences to save more money.
How You Can Start Saving Money
You can’t really be the best teacher when you don’t know how to properly save yourself.
But you know what? Over time building better saving habits gets easier and you will get used to it.
Start small. Take a look at your budget and all your bills and see how much you have left over every month.
Take a portion of that and put it into a separate savings account where you won’t be able to spend it. Don’t even think about it anymore. Treat that money as if it was already gone. That puts you one step closer to financial freedom.
The best part? Setting a monthly savings goal becomes very addicting very quickly. You will work hard to meet your target and if you don’t, you will be disappointed. You can also look into using saving apps like Digit or Acorns. You can learn more about these apps in this Digit Review and Acorns Review.
Do this for yourself if you already don’t. And if you are a saver, then always focus on increasing your goal. You will thank your future self. Make early retirement and paying off your mortgage a goal and always dream of it. If you work at it, you will get there.