Saving is an essential life skill. Without it, a life of financial struggle likely awaits. Luckily, it’s never too late, or too early, to start teaching your children about saving. By instilling the value of saving in your children while they’re young, you can set them up for a bright financial future.
Here are four ways to teach your children about saving.
Lead by Example
Children are impressionable people who mirror behavior. If your children never see you cutting back and making choices that leave money left over for things like a memory care facility in the future, they’re going to have a hard time doing so themselves.
There are different ways to lead by example. For instance, if you always opt for off-brand grocery items at the supermarket, explain to them how this saves money. Or, explain to them why the family only eats out on special occasions to save money.
Buy Them a Piggy Bank
A piggy bank is a great way to help your children learn about saving. Every time they get money, whether it’s from an allowance or a birthday present, have them put some of it into their piggy bank.
Over time, they’ll see that the amount of money in their piggy bank grows and they’ll be less likely to spend every amount of money they’re gifted or earn all at once.
There are different types of piggy banks and you should pick one depending on their age. For instance, don’t buy a glass piggy bank for a toddler.
Offer Them Rewards
If you want your children to save, you should offer them rewards. Everyone responds to positive reinforcement, especially children.
Try matching the amount of money they save each week. If they manage to save $5, add an extra $5 to their piggy bank.
You could also take them out for ice cream or to the movies every time they reach a certain savings goal.
Another reward idea is to let them spend their money however they want once they reach a specific amount. This could be $20 or $50, depending on how much you think is appropriate.
Explain the Concept of Compound Interest
Compound interest is when you earn interest on your interest. In other words, it’s money that you make from your savings. It’s important that your children understand this concept because it will encourage them to save more.
To help them understand, try explaining it to them with puppets or drawing pictures.
If they’re too old for that, try using real-life examples instead. For instance, you can tell them about a time when you saved up to buy a suit and how compound interest helped you reach your goal quicker.
Teaching kids about saving is important if you want them to be financially responsible when they’re adults. By following the tips above, you can help your children learn about the importance of saving and how to do it effectively early in life.