Teaching your kids how to save money at a young age inspires them to develop good money management skills and help build a foundation of financial responsibility. Kids love money whether it’s counting out their pocket money or spending the allowance you transfer in their account as they get older. It is vital for teaching your children how to save money for themselves. Passing on your money-saving wisdom to your kids can help them have a brighter financial future.
Here is a rundown of some tips to teach your kids about money-saving.
1. Teach the Basics First:
Start by introducing your kids to the basic concepts of money and its importance. Talk to them about the money. Tell them what the total monthly expense of the house is and let them know how much the basic necessities of life cost. Talk to your kids about money when they reach the age of 5 or older. Let them know the difference between needs and wants. At this stage, kids can easily start developing an understanding of money. This way, you can give them exposure to managing finances at an early age.
2. Give them Pocket Money:
If you want your kids to have a hands-on experience to manage money, give them pocket money monthly. Once they grow older, they can start saving out of their pocket money and learn how save out of their allowance. You can give them allowance for doing household chores. Letting your children take charge of their money is essential to teach them budgeting. Give them extra money for chores to show the value of money they have earned themselves.
3. Three Piggy Bank:
Use three piggy bank method to teach them about money-saving and good spending habits. Label one piggy bank for saving, one for spending, and one for sharing. They can also be used to save for future or to save for others. Having a piggy bank instills your kids to save and you can reward them when they have filled the bank. Moreover, your kids can also have fun decorating their piggy banks.
4. Open Up a Bank Account:
Once your kid has filled the piggy bank, bring him to the bank and open up a savings account for him. Have them count the money they have collected in the piggy bank and the amount of money that’s going to be deposited in their account. If you have to stay out of town, city, or state for most days in a month, you can quickly transfer money to your kid’s bank account with the help of Western Union. Tell them the rate at which their money will multiply to reinforce the idea of interest. This will motivate your kids when they understand that their money will multiply over time.
5. Use Real-Life Examples:
One of the best ways to teach your kids about money is to give them a real-life experience. They can develop a clear understanding of the budgeting concepts with the help of real-life examples and experiences. Bring them to grocery store when you go for grocery and talk about how you make price comparison while buying stuff. Talk about value of money and inflation as well. Take them to the ATM and explain where this money comes from. Let them hand the money to the grocery store cashier and count the change.