It’s never too early to teach your children about the value of money, including how to save, so that when they reach adulthood, they’ll be able to spend wisely. Children must cultivate respect for money even at a young age. Learning the principles of responsible money management will help give kids more opportunities for advancement when they’re older.
Following are six tips to teach your children the value of money:
1. Expand on the basics of math
Once your children start school and learn math basics, educate them about money and provide some practice. Play money games at home, or download them to your computer, mobile phone, or tablet. Identify different coins, count them together and teach your child how to make change. This way, your child will learn how to use cash when that time comes.
2. Get your child a piggy bank
This simple action will teach your children the importance of saving and instill a sense of responsibility towards handling money. Encourage your kids to collect a certain amount in a particular time frame or suggest they save coins of a specific denomination. Turn it into a game to keep it fun and exciting. On a chosen date, open the piggy banks and count the savings. To encourage your children to save more, create a visual record, such as a chart, to teach them the basics of simple record keeping, and they can watch it grow.
3. Familiarize your kids with the bank
Take your children to the bank and open custodial savings accounts in their names. Let them talk to the teller and conduct their business themselves with your support as needed. Make sure they understand the terms and conditions and suggest they commit to depositing regular amounts weekly or monthly. For more convenient banking, nearly all accounts are now accessible online. Having a bank account of their own will give your child a feeling of achievement, which could motivate them to save more. As a further incentive, you may choose to match their savings.
4. Encourage your children to plan how to spend their savings
Planning for future spending motivates your kids to achieve their savings goals. It reminds them that they can buy whatever they want with enough money. Allow your children to dream big, and encourage them to save more to achieve their goals more quickly.
5. Allow your kids to shop for themselves
Give your children their allowances when you go shopping. You can then observe their attitudes towards spending money. Let them spend some of it, be silly, and make their own choices. Part of the fun of having money is spending it. If your kids want to spend more than their allowance, encourage them only to spend what they have and advise them to be more frugal and patient. Don’t loan money against the allowance they will receive. Our boss doesn’t give a paycheck advance; kids need to learn this too. Educate your kids on sensible spending and explain the priorities when shopping. Also, remind them that at the end of the day, the most important thing is that they can buy what they want because they were able to save money.
A quick tip about providing allowances: Give your child an age-appropriate allowance. For our children, they get half of their age in allowance. So, on their birthday, they always get a 50-cent raise. We provide chores during the summer and expect them to help when needed during the school year. Set some rules for earning the allowance and an amount for your children.
6. Pay in cash
Credit cards are a great temptation to spend money you don’t have, then pay more for the privilege later. Show your kids that the best way to buy items is with the money in their pockets. Try to keep it real at all times – handing over cash is the best way to learn how to use money responsibly.
The best way to teach your kids the value of money and the importance of saving is to lead by example while allowing them some responsibility. Give your children an allowance for the things they might want to buy, and encourage them to save in various ways. Familiarize them with simple record keeping and the way savings accounts work. Leave the credit cards at home when you shop with the kids. These simple but effective steps will help your children learn how to manage money responsibly and prepare them for adulthood.