Make learning to save fun for your kids by giving them an early start in financial wizardry 101. We’ve got some tips to help you teach them how to save money while they’re young!
A penny saved is a penny earned, or so the old wisdom goes. We could all benefit from saving more pennies, and it’s a valuable lesson to teach our kids, too. Instilling these lessons early helps kids grow into financially savvy and secure adults. Especially in the social media age, where many ads and apps encourage them to spend. With that in mind, how do you teach kids to save money? We have thoughts!
Giving kids small ways to earn some cash is a great starting point. Allowing them to earn money gives children the chance to learn how to keep it safe and how to use it. From there, you can start teaching them how (and how much) to save it.
This one depends on age, but no matter how old they are, kids will need a place (preferably two places) to keep all that hard-earned cash. For younger kids, try clear jars. Piggy banks are cute, but clear jars are one of the best ways kids can save money because they can see it accumulating. Mark one for spending money and the other for savings.
Older children may benefit from their own checking and savings account to manage — and the learning opportunity that comes from shopping for the best banks and filling out the applications.
Once your kids have both cash and a place to put it, it’s time to have the talk about what sits at the heart of money management: wants versus needs. Now is the time to break out your own budget and show them all the things that you pay for on a week-to-week basis. Food, shelter, utilities, healthcare, and more — all of these things take precedence over the “wants,” like new toys, designer clothes, snacks, and so on. Giving your kid a firm grounding in these concepts helps them look at the long term (like saving up for that new tablet they want) and avoid wasting money on impulse buys.
Even as adults, saving money is all about goals. We have retirement goals, vacation goals, and more. Give your kids milestones to work toward, whether it's dollar amounts to have in savings, or saving up for a new must-have gadget.
As for incentives, many employers offer 401K matching contributions to retirement plans, right? You can do the same by offering some sort of incentive for meeting goals. But come up with incentives you can afford. Say, a percentage of what they’ve saved each time they meet a goal.
Above all else? Teach kids how to handle money by setting a good example yourself. If you’re overspending on “wants” over “needs,” they’ll learn to prioritize money in the same way, but if you’re careful with money, they’ll learn to follow your lead.