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.
The way I learned to save money was via getting an allowance. It was my paycheck. My mother told me when it is gone it is gone so, you must save some, spend some and give some. Best lesson she ever taught me!
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My parents did not believe in an allowance. If I wanted money, I was on my own to earn it. I cut grass for neighbors (they did let me use the lawn mower) and shovel snow. Of course, the same rules applied. I was to give, save, and spend in that order.
I wish my parents spent more time with me when it came to finances. I got an allowance and had to work for it. I also had to split purchases of things I wanted with them so they weren’t just free gifts. They taught me the basics but when it came investments I got nothing. I have had to teach myself.
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I have read a lot myself as well when it comes to investments. Growing up, there wasn’t really a lot of extra available for investing so it wasn’t a priority.
I’ve always thought kids should be taught about money from grade school on up to high school so they are prepared for the “real wolrd” once they graduate, get their first job, etc.
I think this topic is especially important as kids get into the high school age. Personal Finance should be a mandatory class for all high school students!
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It should be a mandatory class, but apparently it is not.
I also use allowance to teach my kids about money. I think this is a best way to do this when they are still young. Our kids have 3 piggy banks: spending bank, saving bank, tithing bank.
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Very good. I think it is OK to go either way. My wife and I don’t give an allowance as we feel chores are to be completed as part of responsible living versus tied to any monetary gain. That is just our personal preference. There are many different approaches to raising responsible children and your way is certainly one.
I had 6 brothers and sisters so we learned from an early age to be self sufficient. I was always saving my money and saved enough to buy my first car in High School. I guess that is what I want for my children, to be happy and self sufficient.
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Self sufficiency is a great trait to have. I think I have it.
My single most important habit that has helped me to be successful is saving! It got me through college, helped me buy my first house and started me in income property. Learning to save teaches you to delay purchases until you have the money and so much more.
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Incredible advice. Can’t argue with that at all. Thanks for sharing. The best advice is always simple.
We bought a piggy bank for our son that is divided into four sections: save, spend, invest, donate. He is 6 and gets $6 per week. He puts $2 into spend (anything he wants right now), $2 into save (for bigger things, like the Star Wars At-At Walker he’s been lusting after!), and $1 each into invest (college) and donate. We haven’t picked a charity yet, but we’ve talked about how we help others by giving money to those who need help, and he gets the idea.
Anything he decides to add to the invest or donate categories from his spending money, we match. A few times he’s put his $2 from spend right into invest, so he ends up with an extra $2 that week. It always makes me happy!
It’s been a great way to teach him that money is to manage first, a skill my parents didn’t teach me and that I’ve learned the hard way. Hopefully he’ll have the skills so ingrained that as an adult, saving, investing, and donating are second nature and he won’t have to struggle to develop good financial habits.
That sounds like a very good plan and a cool bank as well. Theoretically, it sounds like he should do well.