One of the many things that parents need to teach their kids is how to save money. Whether you as a family are living on a paycheck-to-paycheck basis or if you are of a higher economic spectrum, knowing how to save money is a skill that the kids would take with them once they leave the nest.
While they’re young, you can give them light chores which you, neighbors or relatives could pay them for. The money they will earn can go towards their college money or a luxury item that they would like to buy. Working hard for what they want is yet another valuable life lesson that you can give them while they’re young.
When you have college-bound kids, you would have to teach them how not to rely on what you’re giving them as parents. Applying for a job would actually give them a preview of how it is to be out in the real world. As they start earning their own keep, they would also eventually learn the value of hard work and the importance of saving.
As you can see, there’s a specific lesson about saving money that you can teach your kids, depending on the age they’re in. Here, we will be dishing out individual tips on how you can teach kids to save money depending on how old they are.
These lessons are something that would be of value of them once they grow up. Also, instilling such money-saving habits while they’re young is a really important lesson which can be applied once they are living their own lives as adults.
Ages 2 to 5
The number one rule that parents should keep in mind when it comes to teaching kids how to save money is to start them young. Exactly how young does your child have to be in order to get him or her started on saving money? As early as two years old! Here are the tips on how you can get kids aged two to five to get started on saving money:
Use colorful piggy banks to get young kids to start saving
According to Beth Kobliner, a New York Times bestselling author who wrote “Get a Financial Life”, kids as young as three years old can already grasp simple financial concepts like saving and spending. Another report says that the money-managing habits of children start forming by the age of seven.
What does this mean for you as a parent? These mean that it is never too early to teach kids about the concept of saving and spending money.When going to the supermarket, you can give your daughter a treat by giving her a couple of dollars to spend on any fruit or small food items that she wants. You can also use colorful piggy banks to get your kids to start saving.
By giving children that foundational knowledge of how they should treat money at a young age, they would grow up to be mindful savers, investors, consumers and givers.
Create labelled jars where your child can put money on
Piggy banks may teach two-year-old kids the concept of saving but for three, four and five year olds, having labelled jars is a big help. You can have three jars with labels for Saving, Spending and Sharing.
Let’s say that your son celebrated his fourth birthday and his grandmother gave him $20 as a gift. Have him divide the money on these three jars. Check how much he would put on the Saving, Spending and Sharing jars. If he divides the money equally, then he is getting an excellent start on managing his personal funds.
If there are two or more kids in the house, you can have them all contribute to these money jars or assign individual jars for them.
The Spending jar can be used to buy small ticket items like stickers, candy or small toys. For the Sharing jar, the money can go towards charities in the local community, or for helping out a friend’s cause. The Saving jar can be used for more expensive items, like a gadget that all kids in the house can use.
Teach your kid to set a money-related goal
Each savings fund should have a purpose and the same thing applies to your kid’s money.
Let’s say that your daughter would like to enrol in karate classes but she does not have a uniform for it yet. You can motivate her to save $10 from her own money to buy the karate uniform, and you can provide the rest of the amount. A too-expensive goal might make her feel frustrated, especially if the amount takes too long a time to be pooled together.
For kids aged four to five, have them help you clip coupons
Children who can now read would be able to recognize coupons from magazines which they can help you cut out. Bring them to the grocery store when using these coupons so you can teach them the value of being savvy consumers by taking advantage of such great deals.
All these money saving tips for kids aged two to five are a great training ground for them. By teaching them how to be patient and detail-oriented when it comes to saving, they would realize later on that they can easily manage their own finances once they grow up.
Ages 6 to 12
Next, for children aged six to twelve, here are the money-saving exercises that you can practice at home:
Use apps or board games that help them understand money
Board games like monopoly are fun and give children an idea about how to use money wisely. Aside from that, playing board games serve as an excellent activity for the entire family to bond. You can also use tablet computers as a teaching tool by downloading money-related apps.
There are plenty of applications that you can download for iOS or Android devices which are specifically meant for kids aged six to twelve. These apps will help them save money on the bank, teach them how to budget, give them basic ideas on how to invest, etc.
Open up an account for your kid at the local bank
Once your kid reaches that age when he or she is receiving an allowance, where would the money be placed? This is where you can make an event out of opening up an account at the bank. There are many financial establishments offering savings account products for children.
Encourage your son or daughter to make regular deposits to this account – and as mentioned earlier, the funds should have a specific purpose. The money can go towards college fund or to buy something that you cannot otherwise afford.
Teach kids the value of comparison shopping
Kids of this age range would be avid consumers by now so as a parent, you need to teach them the value of comparison shopping. If your kid is adept with using computers, have him or her go online to look at the different prices and specifications of any item that you are looking at.
Don’t forget to highlight the value of choosing quality over price. Get your child involved in making money-related decisions, such as when you are buying grocery items for the house. You’d be surprised at how eager your kid is to learn about these practical skills that they can use for when they grow up.
Give them ideas about how to make money
If your son wants to buy the latest edition of a gaming console, have him work extra hard for it. Give him ideas about how to make money. How about holding a garage sale where he can sell all the unused things in his closet?
Girls can bake, sell lemonade or offer babysitting services to neighbors or close relatives. Boys can offer to do age-appropriate household chores and be paid for it. Not only will these things add money to their savings accounts, but it will also teach them the value of hard work.
Ages 13 and Up
Finally, for kids aged thirteen and up, it is important to make them realize the value of saving. Here are a few ideas on how you can do that:
Have your kid set long-term financial goals
If you have a thirteen year old son, do you have enough funds to get him to college or are you still saving up for it? If he really likes studying, then he would be more than willing to contribute to his own college fund by working extra hard at household chores which you can pay him for.
He can also save money from his own allowance and scrimp on everyday luxuries so he can have more money to save for long-term goals.
Teach your child to use credit wisely
If you were able to instil in your child the value of saving, you might not have to teach this lesson at all. However, in a college or university, there will be many institutions offering pre-approved credit cards. If your kid does not watch out, he or she can fall into credit card debt even without knowing what the plastic card was actually swiped on.
Teach your college kids to use credit cards responsibly, or prevent them from using the card at all – unless they are able to pay the total bill amount per month.
All in all, teaching your kids how to manage money is essential. When you start them young, they will develop great money management and saving skills – something that will be very useful for them once they are living on their own, out in the real world.