Teaching your children about saving money can be very rewarding for both child and parent. Saving money is an essential life skill that should be learned from an early age. Understanding the concept of money can help kids appreciate the value of everyday items. Seeing your child save money for the first time is a great feeling.
There are a few simple ways to begin teaching your little one how to save money. We have a few ideas to consider when introducing your kids to the idea of saving money for the future.
Explain the concept of saving and buying items
Before children can start saving money, they must understand where it comes from and what it is used for. The best way to teach this is to get common items around the house and let your kids guess how much each item is worth. Many kids only know that money is used to buy things, but it is also important to educate them about charity and donating money to the less fortunate. This would also be a good time to give them an introduction to the concept of work, since it goes hand in hand with saving money.
An important point relevant to the subject of saving is priorities. Learning how to make decisions according to a set of priorities can help develop a child’s critical and analytical skills.
Use saving tools
Kids find it easier to understand ideas when they can see or touch them. Teaching about money using numbers can cause them to get confused or to miss the point. Instead, it can be ideal to use piggy banks and large drawings. Seeing coins and notes add up over time can be encouraging. Likewise, progressing toward a visual goal can be motivating. For example, try finding a picture of something your child says they would like to save up for. Place the image on their bedroom wall with a small graph. Every time your child saves an amount, more of the graph is filled in. If using a piggy bank, the most motivating ones for children are transparent, so they can see the money build up inside. It is also helpful to place the piggy bank near the door to be reminded to save money regularly, without thinking about it too much.
Let them learn from their mistakes
Once your child begins saving money and buying small things like lollies and toys, they are probably going to be short on cash sometimes. This is normal, and it is recommended to let kids learn from their spending mistakes while they are still young. Even as adults we make errors in our budgets from time to time. As a parent, you won't need to tell off your child for their error, because not being able to get the thing they're saving for yet will be punishment enough.
Allowances and extra income
When giving an allowance, it is advisable to start with a very small amount and work your way up slowly. If you give kids a large amount to start with, they won’t need to learn how to save. It is equally important to control how often the allowance is given. Perhaps start with a weekly allowance, then eventually shift toward one payment every two weeks, so that you're paying the same amount of money overall with larger breaks between the payments. This can help kids learn to spread out their spending and closely watch their savings.
Most kids aren’t completely satisfied with the amount of allowance they get from their parents. You can choose to use this to your advantage by letting your kids earn money around the house. Tasks like washing the car or maintaining the garden are a great start. Don’t pay kids for the chores that they are already expected to do, instead choose tasks that are more uncommon and won't be done on a regular basis.