Teaching Kids About Saving Money
Money can be a difficult concept for children to learn, and learning to save money can be even harder. Most children want to spend their money as soon as they get it. So to encourage them to save their money, you should help them see what advantages go along with saving money.
One way you can encourage children to save money is to give them some kind of reward when they reach a certain milestone. For example, you can use lanyards or a badge reel to give them award badges when they have saved $10, $25, $50 and so on. Each time they reach the new level, you can put a new or more elaborate decorated badge on the lanyards. This teaches them to appreciate reaching their money saving goals.
Another thing you can do to encourage your children to save money is to offer a matching contribution. Your ability to do this will largely depend on how much money they bring in. You could match up to 100% for younger children and less for older children who have an allowance or jobs. Payment of the matching funds could be done on a monthly or even yearly basis.
Encourage your child to open up a savings account. This can help in a number of ways. First, they will learn about simple banking processes. They can keep tracking of their savings account and learn to track the interest they earn as they save. Having money put away in a bank account also makes it easier to save because the money is not right in front of them, tempting them to buy the latest video game or DVD.
Teach your children to set money-saving goals. It doesn’t have to be a monetary goal, necessarily. They may want to save up for a favorite toy or for spending money to use on your next family vacation. Let them decide how much money they want to save before the event and use a thermometer to track their progress. Having the visual representation of their progress can be an extra incentive to save.
Related to this idea, you might also encourage your children to make a wish list of items they would like to have one day. Work with them to prioritize which items are the most important to them. You might also want to encourage them to save more than the item costs so that their account is not completely depleted when they make their big purchase.
You can also give other rewards for saving money. In addition to lanyard badges, you might try offering stickers, or a special trip to the park as a reward for reaching a savings goal.
Finally, one of the most important things you can do to help your children learn to save money is set a good example. Keep your own piggy bank and save up loose change each time you make a purchase. Take your children to the bank with you when make deposits and explain to them why you are putting money into a savings account. Let them know about your savings goals. Children love to mimic their parents’ behavior!