If there’s one thing to know about saving and managing your money, it’s that the sooner you start, the better your outcome will be. Learning important financial lessons can take time and some trial and error, but it’ll pay off (literally!) for years to come. In fact, financial literacy is one of the most important skills you can teach your kids.
But don’t get overwhelmed—today’s episode of the Gwinnett Podcast is like a complete money management toolkit. We’re bringing you practical, easy-to-follow financial advice for each stage of your life (from pre-teen to post-retirement), as well as some important money management lessons for the whole family to remember. And make sure to listen ‘til the end as we share four simple ways to make saving money fun for kids. The sooner they learn healthy money habits, the brighter their financial future will shine!
We work hard, and we want to enjoy the fruits of our labor. The temptation can be strong to spend money on extravagancies for ourselves and others. But putting money aside for later means investing in our future, and it’s just smart.
The Federal Deposit Insurance Corporation has offered some money management advice that spans all age groups, beginning with teenagers:
Save money before you’re tempted to spend it. When you get cash for your birthday, from chores, or a job, put 10 percent in a savings account. Also, put spare change to use. When emptying your pockets at the end of the day, put some of the loose change in a jar or container. At the end of the month, put it all in a savings account at the bank.
Start saving now for long-term goals like a house, owning a business, or saving for retirement (it’s a long time off, but it’s never too early). Create a budget for yourself. It’s a good way to see where your money’s which can shape the way you spend it in the future. Get started building a good credit score by getting a credit card, spending wisely and paying it on time.
Have a candid talk with each other about finances. Set short-term and long-term goals. Talk about buying a home. Work through a monthly budget of expenses. Discuss whether or not you’d like to have a joint bank account or keep your earnings separate.
In this phase, and we’re talking late 30s to late 50s, you should focus on retirement and your child’s college expenses (if applicable). It’s important to determine how to maximize your income during your remaining working years, so that you’re well-positioned for retirement. Do this by contributing to an IRA and/or a 401(k). Explore ways to save money for your children. Use a 529 plan or other savings account.
After you retire
Time to reap your reward: visit places you’ve never seen, take up a new hobby, or spend more time with your loved ones. Being successful in retirement means you’ve got to make the most of your income and investments. Have your Social Security benefits, pension, and other income automatically deposited into your account each month. Consider a second career or working part time to boost your retirement income. Be careful with credit cards and monitor your accounts closely.
Of course, the more you know at a young age about money the better. I think a lot of us parents maybe don’t think about this stuff until we get a little older and then we try to figure out as much as we can quickly.
That’s why looking for a good financial advisor is such an important thing to do.
But if you are a parent, then spare your children from that same lesson and start teaching your little ones how to save the big ones!
It seems like just yesterday that homework, homecoming dates and bad haircuts were our biggest headaches. Growing up happens faster than you think, and with age comes bills.
Given how important financial skills are to navigating life, it’s surprising that we aren’t taught the basics in school. How to save, balance a checkbook, apply for a credit card, invest – the list is endless. That’s why it’s never too early to start with your children. As a parent, you carry the responsibility of supplementing the financial education that our schools lack.
Interestingly, kids can begin to understand the concept of money and spending as young as the age of three. Taking that into consideration, teaching your children valuable lessons about how to wisely save and spend money can start – and should start – at a very young age.
You may have to wait to buy something you want.
This is a difficult lesson, even for adults. However, it’s been proven time and time again that the ability to delay instant gratification can predict how successful a child will be as a grown-up. Kids need to learn that if they really want something, they should wait and save to buy it. Allow them to set goals for themselves and help keep them on track.
Make responsible choices about how to spend money.
Explain to your children that money is finite. Contrary to popular adolescent belief, it does not grow in mom’s and dad’s wallets, and once it is all spent, it is gone. You should engage your children in adult financial decision-making when they’re old enough to understand how to prioritize.
The sooner you save, the faster your money can grow.
Compounding interest might be a little too advanced, but you can always simplify the message. Saving sooner rather than later and more than less will reap larger benefits in the future. There are additional monetary rewards that come with saving over a long period of time, so patience is key.
4 Ways to Make Saving Fun for Kids
Teach them at a young age, and your children will have a head-start on good saving habits that they’ll carry with them for the rest of their lives.
Make a savings goal chart
Once you know what your child wants to save for, figure out how long it will take to reach that goal, and make a chart to document how much of each week’s allowance is set aside until they achieve their goal.
Offer rewards for saving money
If your child doesn’t spend any money for a certain amount of time, offer a small reward depending on what motivates them. Consider making the prizes bigger the longer your child saves.
Match your child’s contributions
This is a great way to encourage your child to save extra. Consider setting a standard amount that they have to put back from each allowance, and if they choose to save more, match that amount.
Label different envelopes
Have your child draw pictures of what he or she wants on different envelopes. This will teach them how to prioritize important items by allowing them the choice of where to put money aside. This also helps them understand that some items may take longer than others to save for.