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 check book, 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.
1. 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.
2. 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.
3. 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.
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.
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.
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.