Teach Your Children About Saving Money
The following is a guest post.
There is so much information that a parent imparts to their child. From learning how to walk to riding a bike, there are an unlimited number of tasks to teach children. Often, the concept of money, how to spend it and how to save it can be overlooked.
In order to give your child a head start financially, begin teaching them about money and how to save it.
Why is it important to save money? Kids need to learn why the idea of money is such a big part of their financial future. Younger children may not question the practice. If they have always been saving, they may just assume that is what they need to do.
As they get older they will wonder why they are putting money away that they just can’t use right now. This is a great chance to talk to them about why they are saving.
What should they be saving for? Depending on a child’s age, there are several ideas you want to touch on. The first is saving money for something special. For most kids, this is an understandable concept.
When they walk into a store they immediately look for something that they want. Explain that saving makes it possible to go into a store and be able to pay for something that you want.
Older kids will understand this concept as you mention purchases like a vehicle to drive, college books and tuition or even a new laptop computer. These are expenses that may be coming up soon and they want to have enough money in the bank to be able to make these purchases when the time comes.
It may be possible to explain the idea of saving for an emergency as well to older children. Let them know that as an adult there are always unexpected expenses that come up.
From a car repair to a home repair, these things happen and you want to be prepared. Saving money makes it possible to handle these unexpected moments.
How can they save money? Teach your children to put away a certain amount of their money each and every time they receive it.
Older children may be able to understand the concept of saving a certain percentage.
Younger children just need to be given an amount that they should save each time they come into some money. Whether it is a birthday check from grandma or their weekly allowance, show them that each time that money comes in, some of it is saved.
Where should they put the money they are saving? Money that is saved doesn’t usually go in an easily accessible place. Piggy banks have a slot on the top to put money in, but it takes forever to take the tab out and shake out all of the money.
CFM comments: I remember saving my birthday money, money I got from cutting grass during the summer, and from part-time jobs in high school. Having my dad drive me to the bank and deposit the money and writing the total in a passbook was fun. Those were the days when savings accounts would pay up to 7% interest. I didn’t know as much about inflation or “real interest rates” then.