It can be a worrying thought for many parents that their children might grow up not knowing how to save money, or how to budget, and end up living week to week, pay check to pay check and constantly worrying how they will manage to pay bills or afford anything.
It’s definitely scary with so many young ones not knowing how to manage money or how to save. We all want the best for our kids. And teaching them to understand the value of money from a young age will definitely help a lot.
Here’s how you can teach your kids how to save and to understand the value of money.
Be the example
Your kids are always watching what you do. Even when you think they aren’t paying attention. If they see you splurging on a lot of things you don’t necessarily need, they may be more inclined to do the same. If they see you weighing up the pros and cons, and deciding against purchases, or maybe even going for a cheaper option, they learn they can do without things they want sometimes because it’s not something they need.
Explain how money works
It can be hard for kids to understand the reality of money if all they see is you swiping a card to pay for things. Or whenever you need money they see you stick a card in a machine and it spurts out money.
Explain to them that your money is kept at the bank, and it’s like a big piggy bank. It’s there to use when you need it. The money you earn goes in it, and you take it out to spend it on things that you need. But the most important thing, it’s not an endless supply. Once it’s gone – it’s gone. Until you can put more in. It doesn’t just fill up because you want it to.
Explain the difference between wants and needs
Certain things are nice to have, and they may desperately want them. But they need to understand that the things they need have to come before things that they may really want. And they may not have enough money for both. And when money is limited, those choices are incredibly important. When they think about those purchases later, they may realise that what they desperately wanted, isn’t desired as much anymore.
Give your child some pocket money
I think everyone likes to have their own money to spend however they like. Kids are no different. So whether they earn it by doing jobs or are given a weekly allowance, it’s a great way to teach kids the value of money and how to save.
When taking your child shopping, tell them to bring their money if they think they might want to buy something. If they’ve already spent it, but they really want something, explain to them that they’ll have to wait until they get their next pocket money. If they want something big, help them figure out how much they need to save each week to be able to buy it. They may enjoy counting their money each week as they get closer to their goal. Setting a savings goal for something they really want encourages them to cut down on spontaneous spending. If there’s nothing they want or need, encourage them to save it in a piggy bank, or put it in a bank account and watch it grow.
Let your child do some spending
When your child wants to buy something, help them count out the right amount and get them to hand the money over and wait for their change. You can explain to them they could add it to next weeks money to buy something better, but leave the final decision up to them, unless it’s inappropriate of course.
Offer ways for them to earn extra money
Offer a list of jobs, maybe in addition to the jobs they are expected to do as part of the household, that they can do for a fixed price to add to their pocket money. It’s good for kids to learn that they can add to the amount of money they have if they are willing to work for it.
Making money can also be a great excuse for them to clean out some of their old toys or clothes they’ve outgrown and sell them at a garage sale.
Young children love to play money games. It’s fun to make a little stall and play shop or restaurant or maybe even a bakery. The options are endless.
Put price tags on things around the house, or get them to make something, like cakes out of paper, or draw some food to “eat” at the restaurant. Have some play money or make your own currency out of paper. Or even use buttons if your child is old enough that they are not a choking hazard.
Help your child work out how much it costs to buy each item. Give them a set amount of money and explain they might have enough for some things, but not others. Or they only have enough for one or two things, or more if they choose differently.
You can play over and over again. Change the prices or the items and see what they choose.
There are plenty of ways to teach your child the value of money and how to save it. Make it fun, and show them the benefits. And hopefully when they’re older having the money to pay for the necessities in life won’t cause stress and worry about how they’ll get by.
How do you teach your child to save money?