No matter what the age, teaching kids to save their money can be a daunting task! You don't want to feel like a stick in the mud by never letting them make a purchase decision, but you also do not want to raise careless spenders who are unable to manage and fund their lives as adults.
Often it can seem like there's no real winner when you're caught in the middle of saving versus spending debates. Instead of fighting with your kids about saving money, you can use these tips and tricks to raise them up with a strong financial understanding.
If you teach your kids early in life the value of money and saving, they will grow up instinctively making better financial choices!
Allow Them to Earn Their Spending Money
Children who are given an allowance often spend it immediately. Two days after you pay them, they’re back asking for more.
Instead of constantly feeling hounded by your children asking for more money, allow them to do some chores for payment instead of giving them a no strings attached allowance. If they see that X amount of work is equal to X amount of money, even the youngest of kids will see the value of money.
Having to do a few simple chores can slow down even the big spenders. When they realize that money is not free they may be inclined to hold onto it for a bit longer!
Reward Their Efforts / Match Their Savings
Once they are making money, encourage them to save. All it takes is a simple discussion about how that new toy is $50, and it will take 5 weeks of chores to save up to buy it. They will pick up the concept of saving money more easily than you would think when it’s related to something they really want!
One useful way to motivate them to be saving money regularly is through a system of rewards! Create a fun system for them to earn more towards their savings by offering to match all or a portion of their end of week savings, or offer rewards in the form of activities. These little incentives can really encourage them to always be thinking about saving instead of spending. An extra few dollars each week can really add up; this helps you in the long run by allowing them to draw from their own funds for purchases and spending money!
Discuss Money in Your Daily Lives
This is a big one! Always be talking about money. I know sometimes it can seem weird to be telling your kids that everything costs money but in the long run you’ll be doing everyone a favor.
Kids are eventually going to be adults; teach them now that everything costs money, and they are responsible for earning, saving, and paying for the things they want. Simple discussions about big purchases can go a long way. If they realize that you are working for all the things they want and need, they will be more inclined to value their possessions.
Teach Them to be Giving
A fun way to teach savings is through a budget system! This can seem a little complex for kids, but it does not need to be overly complicated. Using three jars, cups, or envelopes, you can create a system for ‘Spending’, ‘Giving’, and ‘Saving’. Each time they receive an allowance, gift, etc. you can help them decide how much to put in each jar. This concept helps them learn to be balanced; instead of always feeling like they must save every penny, they will have an understanding that moderation is what is important.
Pause that Purchase
One fun idea that I’ve come across in the past has to do with purchases that kids make. Often times they’re rash and excited, rushing out to get something that in a few weeks they ignore. Help kids learn to save money through avoiding unwise purchases.
When they get excited about something that they want to buy now, have them wait for whatever period of time you decide. Fifteen or thirty days can be a great pause before they make purchases. If after that time they come back and say, “I’m ready to make my purchase”, then consider allowing them to go ahead.
The key here is that they should be coming to you after the designed waiting period because they are still thinking about the item they want. If not, they probably would have ended up with something frivolous that they would quickly lose their interest.
Open a Savings Account
Finally, one simple but effective way to help kids save is through a typical savings account. Getting the money out of sight will keep it out of mind. They will not be tempted to find something to buy just because they have a jar full of money under their bed. Help kids understand that by putting money aside in a savings account they can let that money grow and earn interest as well!
How do you teach your kids to save money?
Leave a Reply