8 lessons you can teach your kids on saving money
- It is good to make your children financially independent at a young age
Don’t start with money: Yes, the headline says saving ‘money’ but at such a young age, handling money and understanding its concepts can be problematic for children. Instead, talk to them in ways that affect them. Use coupons, candies, treats or wishes to instill the first lesson. For example if your child likes to play games on your mobile, give him a coupon or a sweet and tell him he/she needs to give you the coupon or sweet in order to be allowed to play the game for one hour. Be firm about it and similarly for cartoons. Giving away something they like in return for another favourite pastime will serve as another lesson.
Create a goal: Start small, set small goals. Sit along with your children and tell them that if they want a certain something, for example, a trip to the park or the mall will only be completed provided they submit 10 of their favourite candies or maybe two of the coupons you gave them at the beginning of the week. So it will teach them that in case they need something important they will need to save for a longer period of time.
Create accounts for saving spending and giving: Not just saving, children need to be taught the other connected aspects as well like spending and earning. Make these attributes physically available to them. Create paper accounts or maintain a ledger related to their savings or better still give them three jars with labels like saving, spending and earning and teach them what they mean. Show them how jars fill up and empty depending on their needs. Tell them they also need to set aside coupons for giving. Make an example of how giving their sibling a coupon will count for a good deed or giving a needy child sweets brought from their savings is giving.
Explain spending in brief: All this talk on saving and money will be useless if you don’t actually sit down and explain the consequences of their actions and so explain the concept of money in simpler terms. Tell them the importance of paper currency and coins and how you give money in return for items, using examples of their coupons etc. It is important for children to understand spending based on needs and wants. Tell them they should prioritise needs over wants when it comes to spending. A chocolate can be an example of a want while a comic book can be the example of a need.
Award child for reaching goal: Reward and appreciate your children for having reached their goal. Reward them with their favourite toy or food or better still, match their savings in money, and in case they are starting out with actual money then give them a start up fund from where to begin saving, spending and earning.
Allow them to spend and make mistakes: Now that your children have started saving and their accounts are in place. Allow them to spend the money from their collections for the small things they want, for example buying a toy or buying their sibling a gift. It will give them a sense of financial independence and pride of having bought them through their own savings. They might, like us, go all out on their favourite dress or toy and when the need for another purchase arises, they might be left without money. That’s one of the earliest lessons they will learn in managing their priorities. Also you get to teach them about debt. Lend them part of the money needed with instructions that they will be expected to return it.
Gift them a piggy bank: It is the best way your child can keep a physical record of their monetary achievements. Make saving more fun and regularly encourage them to count their savings so that they can keep a track of how money is coming and going.
Talk about earning themselves: Use real life experiences if you want to teach a child about money. Teach by example; a trip to the market or to the toy store. Children will learn the value of money quickly if they work for it, and therefore, it is important to identify a task for them, however small it may be. Making them do chores around the house in return for money or apprentice them at a neighbourhood store to learn the importance of money and transactions.