5 Ways To Teach Your Kids About Saving And Spending
Teaching kids about money is necessary in today’s fast paced life. When the reality of life comes crashing into their world, it can be traumatic if they are not prepared. Teach your kids about money in a direct and physical way by making it relatable to them. Develop their understanding of finances from a young age as it will help them plan more effectively and make better decisions in life as they grow up.
Teach them about your techniques of saving and investing. It will turn out to be a life lesson that will help shape their financial future. When dealing with money becomes a part of their daily life from an early age, they will thrive in difficult financial situations in the future.
Try to keep lessons simple for young children and make them learn the value of money and the basics of budgeting through creativity. Need some advice?
Here are five ways to teach kids how to budget, plan and save money.
Talk about Money
Most of us were raised in an environment where adults did not talk about money around us. We were asked to go to our rooms when financial discussions had to be done. Well guess what! Experts have a different point of view. “Money should not be a taboo subject in the household.” writes Byron Ellis, managing partner of United Capital Financial Life Management, in an original article titled 5 Things You Must Do To Help Your Children Make Good Financial Decisions. “When you talk to your kids about money, it removes the mystery and helps them make smart choices. It might initially feel awkward, but don’t let your uneasiness cause you to miss opportunities to teach important lessons and don’t be afraid to talk about the bad along with the good.”
Speaking openly about money around kids makes them aware about how such situations are handled. Discussing sensitive financial matters, such as salary negotiations and retirement accounts will help them in the future. Do not shoo your children out.
The next step would simply be to start a conversation about money. Talk about your spending and savings practices and find simple ways to show how you make financial decisions using math. Make them participate in grocery shopping and ask them to figure out the best deals on groceries by comparing shelf prices and using coupons. Get them involved and make them aware of how you spend and save by asking creative questions such as, “Is a bag of apples better priced than individual ones?” or “In a restaurant, how much tip should you leave?” and “How many quarters do you need in the meter to park for an hour?”
When you show kids that money is a huge part of daily life, they will not only value it but also show interest in budgeting and will think seriously about how they use their resources.
Give them Allowance
If your child is not old enough to get a job, give them or let them earn some allowance so that they can learn to manage money on their own. This could also be an opportunity to teach your kid about household chores such as folding laundry or feeding a pet. These simple tasks will not only inspire them to feel like they are making a valuable contribution to the family but it will also display the concept of earning money through work.
Suggest your kid to collect the money in a jar or a piggy bank. For younger children, clear jars provide a more visual representation of how much they have collected. You can also tell them to count the money and place it into separate jars for saving, spending, and giving. When they become teenagers, consider trusting them with their own bank accounts so that they learn about banks too.
Handing your kids their own money is a great opportunity to have a broader conversation about how to set up a budget and establish savings goals.
Teach them about Saving
Teaching your child about saving money can be one of the hardest lessons, but also the most beneficial one. In a survey conducted in 2012 by the AICPA (American Institute of Certified Public Accountants), it was revealed that only one percent of parents say their kids save any of their allowance.
Start a conversation with your kid about prioritizing things they need to spend money on. Help them save for a goal. Ask your child to make a list of items they would like to save for. Review the list and help them decide which goal item to pick first. The best way would be to start with a less expensive item for which they can easily save up in a few weeks time, as opposed to months to keep them encouraged.
Remind them to save money for it and teach them that every time they spend on something, it will put them behind in reaching their end goal of a bigger purchase.
Such practices will enable kids to start thinking about where and how they should spend their money and will also help them understand the value of their savings over the long run.
About the Author: Lisa Brown has been helping her readers in successful business and entrepreneurial strategies for the past 3 years. She currently works with uae.ekuep.com, which is the answer to UAE’s growing restaurant industry. Ekuep is the brand that restaurants, bakeries, cafes, juice bars, and more turn to when they want to stock their kitchens with only the best restaurant equipment.