Financial Planning: How To Teach Your Kids About Saving Money
Teaching children to save money is difficult. Kid's are often all about spending and not so much about saving. However, it's incredibly important to teach your kids the importance of money and saving. Setting financial goals, understanding debt, and practicing smart shopping will help your child have good habits that will hopefully last a life time!
6 Ways Your Kids Can Save Money
The following are a few ways your children can learn how to save:
Buy a Piggy Bank
Make sure your child has a "piggy bank." Having one place to keep his or her money will encourage your child to make it grow. I think the three slot banks are the best. One slot for spending, one for saving, and another for sharing with others.
Get Your Child a Savings Account
Speak to your child first about the concept of a savings account as they may be afraid they won't see their money again. Then make sure you choose a bank that will not penalize your child for having a low balance. You'll also want to shop around. Many banks will match your child's first deposit (up to a certain dollar amount) and offer savings tools that may appeal to your child.
Be Open and Honest
When your children are old enough show them your monthly budget. How much is left over after the bills are paid? By seeing where the money goes and that there is a "fixed" amount each month they will begin to learn why you're asking them to turn the lights off, and not take 45 minute shower.
Teach Kids to Look for Additional Savings
Do you use coupons? Why not get your child involved? Have them create a "coupon binder" by using a small soft sided photo album (they can even decorate it)! Then let them look for coupons around stores and in the Sunday paper for products or restaurants they'd like to use them on. You can even give them a small budget each month of their own and challenge them to use coupons to get more bang from their buck!
Set a Family Goal
Get the family together and decide on a fun event or activity you would all like to participate in. It could be an outing to a local amusement park, dinner at a restaurant or even a vacation. As a group decide how much the outing will cost. Then challenge everyone to find ways to save on monthly expenses so there will be money to contribute to the special fund. this will not only give them something to anticipate but will teach them to save for a future purchase rather then going into debt to obtain it.
Let Your Child Make Mistakes
Sometimes the best lesson comes from making a poor decision. I've learned that at times I need to step back and let my daughter make a decision about spending her own money that I know she'll regret. Like the time she insisted on buying a video game that was too advanced for her although I did point out that fact, she insisted. She regretted soon after playing the game, however, and could not return it. It was a hard lesson for her but she did learn from it.
What ways are you and your family saving money? How do you teach your kid(s) about the importance of saving money?
Photo courtesy of flickr.
Rita is a frugal mom who enjoys helping those in Chicago and beyond find ways to stretch their budgets on her blog www.chitowncheapskate.com.