Teaching Kids to Save Money the Easy Way
Teaching kids to save money is easier than you might first think.
There are a lot of influences in a child’s life these days which
teach them the opposite of what you might want – advertising tells
us everyday that we can have whatever we want, right now, by
putting it on credit and paying for it later. Of course, it’s not
that simple – this is how people get into a burden of debt that
can last a lifetime.
Children are particularly at risk of falling into this kind of
thinking pattern. Bad habits formed in childhood can lead to
financial disaster later in life. On the flipside, instilling good
saving habits early on can help ensure you get your child off to a
good start in life. But how do you do it?
Teaching Kids To Save Money by Example
The first rule of teaching anything to your children is to lead by
example, and finances are no exception. One of the best ways to
educate your kids on the idea of saving is to show them how it works
in practice as you do the same for an item that will be useful to
the whole family, such as a new car, TV, or camping trailer.
If you have a tendency to live too much on your credit cards, you
might want to examine this habit before you start trying to teach
your child to save. Children will pick up on the habits of their
parents as actions speak louder than words. Of course, sometimes a
credit card is useful and necessary – but if you regular buy
non-essentials on credit as an “indulgence,” you’ll need to stop
that if you want to set a good example for your kids. They learn by
watching and mimicking you, so telling them one thing while doing
another is bound to get you nowhere fast.
You will see the concept or setting an example repeated over and
over again on this website. It's that important.
Give Them a Long-Term Plan
Children don’t have a natural tendency to think in the long term,
which is why saving can be so difficult for them – it seems easier
to spend five dollars on candy now, than to save fifty dollars for a
new toy. This is why you may have to introduce a system to help them
keep track of their dollars.
This is best done using a daily or weekly planner or print off and
use this savings
This will help them see exactly how long it will
take them to save for a given item. It lays out the path ahead of
them, so they’ll be less tempted to spend their cash on impulsive
items in the short term.
Teaching Kids To Save Money-The Dollar-for-Dollar Approach
Some parents create incentives for their children to save by
offering to match every saved dollar with a dollar of their own. In
other words, if your kid has a dollar and spends it, it’s only worth
$1. If he or she saves it, it then becomes $2. This is a good way of
introducing the concept of interest (or even return on investment,
if your kids are a little older). Of course, you don’t have to go to
the extreme of going dollar-for-dollar – a smaller incentive, like
an extra 10 or 20 cents for every dollar saved, will often be enough
motivation to teach kids to save money.
Another way to teach kids to save money is to open a savings
account for them.
See details on our Teaching
Kids about Money Ebook
for more lessons on banking, checking
accounts and credit cards as well as more money
designed to teach kids basic concepts and using cash
in everyday life.