10 Tips for Teaching Your Child to Save Money this 2024
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Saving money from an early age leads to timely financial independence. It is advised to take baby steps when nurturing young kids about cutting a sum of their pocket money to make savings. It is an ultimate survival skill that is generally disregarded by parents because, presumably, it is a hard-to-teach habit; therefore, parents have been putting it off their shoulders until their kids are at least young adults.
On the contrary, according to a survey done by Statista in 2020, around 41% of American children have a piggy bank, and every one in two American kids owns a bank account. So, what is it that these parents are doing right for kids so young to have their own savings accounts? And the question is, are these kids actually putting their financial instruments and accounts into use? Read further to find out about all this and some easy ways you can drive your child’s interest toward saving money.
10 Tips for Teaching Your Child to Save Money
#1. Teach them young
The first step in training your children to save money is to teach them how to spend less. For younger kids, it is ideal to look for fun ways to keep them entertained while teaching them about this crucial yet somewhat tedious life tenet. Just like all the other habits, It is considered that if the children are encouraged to start saving from a young age, it will be a lot easier for them to get hold of it.
Typically, younger children like to spend the most on junk food, and that is the critical part of getting them to save money. Train them to cut short on their miscellaneous expenditures and educate them on how they can use this money in other ways.
#2. Set a good example
Setting a good example for the younger ones is the prime form of teaching them your habits. Children replicate your actions, so be their role model. Make them a part of the process by discussing savings, expenditure, and funds with your partner to make them aware of the basics. It will indirectly enlighten them about significant money-related decisions.
#3. Arrange Opportunities
Money lessons won’t be sufficient until you provide practical opportunities to your kid, yourself. Ask your child about a goodie or a gadget he wants. Then tell him a goal time period for which he saves a certain percent of his allowance so he can pay for his gadget, toy, or any other desire. The result will be delightful, and it will further motivate them to save more and fulfill their desires.
#4. Make it Entertaining
Try coming up with exciting ways that develop brain memory while politely teaching the kids the lifelong lesson. Money and financial matters are rendered boring and bland by tiny brains, and therefore kids lose interest in no time. Incorporating games like a monopoly in financial lessons and arranging small competitions among siblings prove to be really fruitful with outcomes. This way, you can make the learning experience healthy, fun, and accessible.
#5. Let them make their own purchases
Allowing your child to make their own decision for purchasing stuff could be risky. As a parent, I understand how we want to supervise each move of our children, so they do not make wrong decisions or face failure.
Letting them make their own purchase will help them learn about spending the money and how they can save if they go for a cheaper yet similar alternative, e.t.c. Letting them experience the whole purchasing process will make them understand how to spend money properly and save.
#6. Allow them to earn
It seems like a far-fetched step in money-saving awareness of kids, but once your child reaches the teen years, it would be great to let them earn. Earning your own money by putting in all that hard work and sweat makes one respect and acknowledge its worth. This will encourage them to spend less and eventually save more. The mathematics of currency, when mastered as a first-hand experience, will definitely groom your older kids swiftly.
#7. Let them learn from their mistakes
During the learning process, make sure you do not forget that the students are, after all, kids and are meant to make mistakes. Kids learn by their mistakes, and it helps build resilience which is essential to raising a confident and capable child. You can encourage kids by giving them room to make mistakes and embracing them open-heartedly so they can take them productively.
#8. Teach them to invest their savings
Financial planning works in a loop. From saving money to doubling, it teaches sound money management. To keep the money rolling, teach them to invest their saving. Older kids can buy shares in small businesses. Putting money in a savings account and investing in stocks are also good places to put your kid’s money.
#9. Have them track spending
Indulging your kid into the mathematics of money makes them aware of its value. As an adult, tracking your spending gives an idea of what was worth spending money on and what was not. If you allow your child to follow their weekly expenditures, make a list and study it, and calculate the total money spent, all this will help them grow their vision about the utility of the finances and how to spend less to get to save.
#10. Arrange a place to save
Last but an essential tip to put your kids into saving money is to provide them with the right places to save. You should assure the money teaching kids about the safety of places they are saving their allowance. Piggybank, savings account, or a custodial account are the standard measures provided by parents to their kids. Having a personal debit card can give children a sense of responsible spending. It encourages them to manage personal finance independently, leading to big boy financial literacy.
How can Parents Teach Kids to Distinguish Between Needs and Wants?
Giving brief know-how about the difference between needs and wants is extremely important and one of the initial steps to creating awareness about saving.
Parents can arrange activities where they can ask their children to look around their rooms and come up with a list of things they actually need for survival and what they merely want.
It is hard for kids to understand the fundamental difference between either of the terms at a young age, especially when living under parental care and affection. The knowledge will assist them in dealing with their personal finance and help them spend only on needs until they have saved enough to go for their wants.
What are the Challenges to Teaching Kids about Savings
Teaching kids might sometimes get either on their or your nerves, and the reasons could be merely their age.
Unruly behavior is a sign for you to stop immediately. It shows that the knowledge and the stress are too much for your young one to deal with. Make sure the kids are at least 6 to 7 years of their age to be introduced to these critical lessons. It is hard for kids younger than this to ponder financial issues, and naturally, they’ll get uninterested and drift away from your key goal.
What is the Importance of Savings
Adequate financial literacy and timely savings always come in handy. Saving money is vital for early financial freedom and provides you with security in unfortunate circumstances. You can live a stress-free life if you have savings in your account. A debt-free life is a privilege, and you should not steal yourself from one. For peace of mind and sound sleep, it is essential to start saving from day one. You can use them to establish an emergency fund and later invest them in stocks, mutual funds or pay for the luxuries of life.
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Conclusion: Tips for teaching your child to save money
In the end, I’d like to say do not be hard on your child. Every kid understands and learns at their own pace. For the longest we let our kids believe in the idea of free money. Concepts like collecting your money, saving, cutting your junk intake, purchasing for yourself, e.t.c, are foreign to them initially. Encourage saving, facilitate their requirements in this new journey and allow them to grow accustomed to saving from their small allowance gradually.
Tips for Teaching Your Little One to Save Money FAQs
What should a 10-year-old save up for?
There are so many reasons you can give your 10-year-old to save up for. They can save for a gadget, a toy, a treat they have wanted for the longest, a ticket to a famous amusement park, spending on a family vacation, induction into a dream high school, or taking on a field trip possibilities are endless. Make their savings goals clear for them, so they are enthusiastic about collecting money.
When should I teach my child about savings?
Saving money is an age-by-age process that requires a good guide who takes the child step by step before finally making him save a considerable amount. Teaching kids about saving and its different aspects and difficulties from at least six years of their age to until they are ready to take over financial responsibility is advised.
