Financial Literacy For Kids: How To Teach Children To Save Money
Many children who grew up not learning how to save end up as irresponsible adults without any idea how they should handle their money. This is also why pop stars, athletes and some big businessmen end up broke despite what they earn. Saving is not about what you earn, but what you get to keep. In this regard, it is best to teach your kids early how to save, because it is a skill and discipline that takes some time to take to heart. Here are some tips.
Teach Them to Always Put Away Small Amounts
When you start giving your kids money of their own, also teach them how to spend it. Of course, they get a portion for their food, some school activities, but be sure to tell them that they should not spend every cent of what you give them. When you teach them to put aside a small value regularly, you are inculcating in them a basic financial habit at a very young age which, sadly, many adults would never have.
Let them know why they should set aside money. You can tell them that if they save up, they can get a better life when they get a little older. They can buy that toy that they have always wished for, but they should make sure that they do not spend all their savings for such.
Start With A Piggy Bank
The piggy bank has grown from what every kid used to have in their homes to some sort of an icon or home decor. However, what a lot of parents do not know is that this can actually teach their kids to save at a very young age. You can tell your children to put away small amounts of coins and maybe bills once in a while and put them into the piggy bank. Dropping coins into a piggy bank teaches your child discipline, since he or she cannot open it until it is full. Your child will have to wait before it can be broken open.
Once the piggy bank is full, open a savings account for your child. Make him or her count the amount of money that will be deposited so he or she has a first-hand understanding of how much money has been set aside. Let your child know that the money will grow over time if left untouched and added to regularly.
The Principle of Delayed Gratification
You might have heard of the marshmallow test where young kids were given one marshmallow and instructed not to eat it until their teacher comes back. When the teacher returned, some kids ate the marshmallow while the others waited. Those who were patient enough were rewarded with another marshmallow. The study shows that, later on, these patient kids became more successful in life.
Let your kids know that they might have to wait a while before they get what they want. This might be quite hard to teach in a world where almost everything is instant, but kids who learn the value of patience early have a lot of time to cultivate it and live its principle.
Set Goals for Them to Reach
When your child tells you what he or she wants to save for, figure out how long that would take and make a chart. Some creative parents put different boxes or envelopes for each week and you can mark such box or envelope with a star or a smiley face when your child reaches those goals.
When you do this, your child sees how much closer he or she gets to the goal. You know how much allowance you give your child and you should set goals that are realistic and attainable. This is a great way to get children excited while learning how to save.
Be A Good Example
Your child will be aware of your financial status sooner than you know. He or she will also follow how you actually manage your money instead of what you tell them to do. The best thing for you to do is to show that you too are very careful in saving money. Let your child learn that saving is a basic life skill that everyone should learn.
The earlier your children learn how to save, the better they will be at it. Do you have any other tips on how to get your children to start saving? Share with us your thoughts in the comments below.
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