It's never too early to start teaching your kids about money. In fact, you can start as young as 5 years old!
Having an understanding of money can help one to achieve goals and enjoy a nicer life. Simply creating a "save" jar isn't enough to effectively teach your children to save money! They need to understand the value of money and how to properly utilize it. This helps them to prepare for the real world and be able to efficiently manage their finances in the future.
Here are 8 tips that can be followed to teach your children how to save up money.
1. Piggy Bank
Yes, piggy banks actually do help! As they are not as accessible as wallets, keeping your child's cash in one can help it to slowly accumulate over time. In addition, breaking it open when it is full will definitely be satisfying!
2. Document It All
Whether your child maintains it physically in a notebook or online, make them document every expense made. This allows them to keep track of their spending habits and be aware of unnecessary expenses. Tell them to ask you for advice if needed.
3. Budgeting
In addition to point 2, teach your child how to create a budget. Tell them to try to not exceed it for the first three months. In the next three months, try to save 5% of it. In the following three months, try to save 10% of it. In the last three months, reward your child from their own savings. This teaches them how to save towards a goal and the value of patience as well as consistency in saving money!
4. Match Their Savings
Tell your kid that if they save X amount of money every months, then you will match their savings and add the extra amount into their savings. This will definitely teach them the value of savings.
5. Take Them To The Bank
Yes, allow them to see where and how money functions! They may not understand it all right then and there, so baby steps are needed. Give them small errands in the bank, like standing in line for a cheque deposit or depositing the cheque correctly in the right box. Let them see how you deposit your money into the bank. All of this knowledge will in turn accumulate into a deeper understanding.
6. Shop Smartly
Don't buy the first fancy jacket you see with your kid in a big fancy store. Go home and research online, or go to other stores with them. Teach them how careful decisions are more valuable than impulsive buying. Then, reward them with the money saved and deposit it in the piggy bank!
7. Open a Bank Account
Most banks offer accounts for children to teach them how to save money. Encourage your child to get one which you can monitor. Allow them a prepaid debit card only if they are above 12. A limited card will teach them how to work
with limits! Reward them if they stay within 20% of the card limit.
8. Let Them Make Mistakes
If your child wants to spend all their Christmas money, let them. Then when they ask for more in January, deny their request. Let them learn practically about the consequences of overspending. It's a small mistake you both can afford to make, but it will teach a big lesson.
Just like good table manners, money is also a habit learned over the years. While it may be slow and difficult to establish the core foundations, your child will surely be grateful to learn how to handle the responsibility of money!
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