Money saved is money earned. The art of saving and proper financial management can improve the family budget. Often parents give their children pocket money but do not control the spending the children at all.
Children aged 4-6 are beginning to understand that cash can buy a lot of things. New toys, gadgets, and entertainment never bother them. Toddlers begin to ask for money from their parents almost every day. Children at the age of 7-9 try to manage their finances on their own.
The time has come for parents to tell their children how to make their dream come true in the form of a new “Wishlist” with the help of spending planning. Thrift developed from childhood will help in adulthood to have funds for unforeseen expenses.
Why is It Important to Teach Kids Save Money?
Children show their first interest in money around the age of three. Toddlers see a connection between cash and satisfaction in the form of sweets or toys during preschool years. Children without hesitation spend pocket money on their desires when they receive it from their parents. It is important to teach children to achieve big goals by managing money wisely.
The joy of a spontaneous purchase passes quickly. A few more minutes and the desired toy does not seem so attractive. You can wait a bit and get a more expensive quality item instead of a sudden purchase. Thrift helps develop endurance, self-discipline, and patience.
It is important to teach children to prioritize. Saving should not be promoted for the sake of simply accumulating money. It is worth choosing an event that is significant for the child as a guide, for example, an excursion, buying a mobile phone, etc.
15 Ways for Teaching Kids to Save Money
It is necessary to allow the child to use the money to teach them how to save them. Many parents give out pocket money once a week or a month. This is a good way to show your little one that cash doesn’t come in every day. The child understands that not everything can be bought here and now.
Cost savings are often confused with total control. Parents should be prepared that at first, children will spend thoughtlessly without thinking about the consequences. It is worth setting a limit on the amount of pocket money in this case. Children are aware of the limited means and are ready to learn how to save money.
These simple ways will help children of all ages learn how to save and take good care of money.
Set an example – Children perceive an example better than teachings or reasoned recommendations. , Toddlers understand the effectiveness of planning when parents discuss the budget and prioritization of purchases in front of them.
Use role-playing games – Children discover the world through play. Role-playing games become an effective way to demonstrate the possibilities of accumulation at the age of 4-5 years. Entertainment like “Shop” will help to show the baby’s ability to use money.
Mom can ask what the child wants to buy and whether he regrets his purchase. Questions such as “what would you buy if you had more money” will help you find out about the desires of the baby and the willingness to temporarily abstain from shopping.
Make a list of goals – Children desire many things in their primary school years: gadgets, board games, and toys. You can invite your child to make a list of goals and categorize them as priorities.
You should write indicative prices next to each item. So the kid will be able to decide for himself for what purpose he will save money, make new or cross out irrelevant items.
Make a shopping list – Invite your child to make their shopping list. Show how much an item costs in the store, and how the price changes during a sale or promotional discounts. The child will gain practical experience in spending and saving money.
Designate a goal with a piggy bank – Psychologists recommend visualizing goals. A kid can forget about the purpose of saving if he just puts money in a piggy bank.
The child gets more motivation to refrain from spontaneous purchases by signing a piggy bank “on headphones”, or “on a game console”. You can use multiple piggy banks. The child will save money for minor pocket expenses on one and the other, and he will keep funds for important acquisitions.
Get piggy banks for parents – It is important to set an example for children. Better demonstrated is a clear example of saving money even if the parents have a savings account. Parents and children can conduct some kind of competition: who will save up faster for their goal.
Make a tracker measure goal achievement – They use a magnetic ruler with the image of a fairy-tale hero as a tracker. The more money the kid accumulates, the further the hero will move: until he reaches the final. It is easier for a child to be motivated and visualize the achievement of his goal in this way.
The ability to earn independently – This practice is suitable for teenagers. You can offer your child to help neighbors, and do some types of household chores for money. Self-earned money is more valuable to a child than pocket money. He understands that cash appears as a result of the actions performed.
You can’t pay for high grades in school. The learning process is the responsibility of the child. Children have their household chores, just like adults, which they have to do for free.
Investment – This method of accumulation is suitable for children 13-15 years old. Adults invest in currency or securities transactions. Children cannot conduct financial transactions, but they can give their parents a “loan” for a certain period. After the expiration of the term for using the money, the parents give the child his contribution with interest.
Getting a loan – This savings method is suitable for children aged 8-10. If a child wants to buy a toy right now, but he does not have enough accumulated funds, his parents can lend it to him. You will have to give money with interest from pocket funds. Children thus learn to understand the true value of things bought in a fit of desire.
Spending money – Paradoxically, shopping will help teach you how to save money. Psychologists recommend allowing a child to spend part of their savings. It should be discussed after going to the store what the baby bought, at what cost, and whether it was profitable to purchase it. You cannot scold a child if he mishandled the money. Better advice on responsible shopping.
Sacrifice and balance – This monetary wisdom is recommended to be taught to children aged 10-12 years. The child is asked to choose three things that he wants to buy. You should give a limited amount for which he can only purchase two items from the list. The lesson of “sacrifice and balance” helps to understand that sometimes it is necessary to sacrifice one desire for the sake of another. So comes the understanding of responsibility for their decisions.
Savings in 10% of pocket money – A child will always have funds for unexpected purchases if he is taught to save at least a few percent of the money received (pocket money from parents, gifts from grandparents, etc.). This is a good practice that will help you create a “financial airbag” in adulthood.
Budget planning – Children aged 10-12 should be taught how to budget. You can use a regular notebook or install a mobile application. They make a profit, set goals, plan expenses, and write down each purchase. The child thus sees for himself what prevented him from saving up for the desired thing.
Encourage the efforts of the child – Parents can add the missing amount if the kid has saved money responsibly, but he lacks quite a bit to reach the goal. Encouragement will show that the child did everything right. Such a cash prize helps to keep the motivation for further savings attempts.
Provide Live Examples of Money Value
Children of preschool age think that parents have unlimited funds: you can go to an ATM and simply withdraw the required amount. A child can understand the true value of money through a living example. One of the parents can take the baby with him to work, and talk about his duties and the number of daily earnings.
Then you should take the money earned, take away taxes, utility bills, health insurance, and funds for food. It is important to explain to the baby that the balance forms the amount that can be spent on entertainment, sweets, etc. The child understands from such an example that money needs to be earned and it will not work to spend the entire amount on your desires.
Instilling the concept of the value of money will help to refuse a request to buy a new toy. Parents unconsciously destroy the child’s awareness that money is not given to them just like that, succumbing to the impulse to please the child.