Learning to manage money is one of the most important lessons parents can teach their children, but many kids are growing up without learning why it’s important to save money or how to do it properly. Why are so many children failing to learn about finances? And why aren’t the schools stepping in and helping out parents who aren’t able to show their kids the right way to save?
Just like religion and sexual orientation, finances have become a touchy subject in schools and sometimes in the home as well. The economy might be partly to blame for this, but shying away from the problem is only making things worse. Today’s children know less about money than their parents did at the same age when they should know more. These money saving tips for kids can help parents teach their children the value of a dollar.
1. Pay Your Kids
One of the biggest mistakes made by well-meaning parents is denying kids access to money. We believe that by managing their expenses for them, we are making their lives easier. While this might be true in the short-term, we are also making them dependent upon us for years to come. When they grow up and move away from home, they won’t know how to create a budget and stick to it. In order to teach kids to save money, give your kids an allowance they can use to cover some of their expenses. If your children are a little older, a part-time job is a great way to learn money management as well as other valuable life lessons.
2. Out of Sight, Out of Mind
The old adage holds true. After you and your child have determined how much money they will be bringing in, decide on a percentage of that money that will go straight into a savings account, piggy bank, or other safe holding place. Your kids won’t see this money again for a long time, so don’t make it to large a percentage-no more than 40 percent of their earnings. After two or three months of doing this, show your child the bank statement or let them count the cash that has accumulated so they can see how much they saved. With encouragement, this practice will become second nature and continue into adulthood.
3. Help Kids Set Goals
For young children, short term means within a week, mid-term means within 2 to 3 weeks, and long term is anything more than a month. For older children and adults, the numbers are a little different, but kids get frustrated easily and it’s important to show them that their goals are achievable. An example of a long-term goal would be buying a scooter, while a reasonable short-term goal would be visiting the ice cream parlor on Friday afternoon. Their savings (which should have already been deducted from their allowance or salary) won’t fall into any of these categories, since planning for college or buying their first car won’t hold the attention of most second graders.
4. Give Credit For Money Saved
Let’s say you always buy the same brand of toilet paper on your weekly shopping trip. Your child finds a coupon for 50 cents off your favorite tp. Give him the 50 cents you saved. No, this isn’t how the real world works. But it will give your child a sense of accomplishment when he saves money and an appreciation for bargains. Money management tips for kids aren’t just about mimicking the real world-they are about instilling values in children by rewarding them for a job well done.
5. Teach Comparative Shopping
If your child is a little older and not particularly proactive about clipping coupons. You can teach this type of kid how to shop around for a good deal by charging her when she overspends. For example, your pre-teen daughter has been saving up for a tablet. She’s so eager to get her gadget that she runs straight to the electronics store and buys it the second the money hits her pocket. The next day, you happen to see an ad for the same tablet for $20 less at a different store. If the store is accessible to her and the tablet is the exact same one she purchased, charge her the $10. You can add this money into her savings account or hang on to it-you can give it back as a reward next time she makes a smart financial decision. Just don’t give it to charity, since this can make kids feel negatively about making charitable contributions.
6. Donate To a Worthy Cause
Help your child choose a cause to support, and set a donation goal. Giving to others helps children appreciate what they have and feel good about themselves to boot. And while giving away money might not sound one of the best money savings tips for kids, financial planners almost always suggest adults do it. It makes us take a good hard look at what we have earned and help others while doing so.
Kids will make mistakes, and when they are allowed to manage their own money some of those mistakes will be financial ones. The public school system is unwilling to touch the subject of finances, so parents need to implement a plan for teaching money management in the home. These money saving tips for kids are a good place to start. It might hurt to watch them blunder, waste their money on something you consider useless, or lose money due to a bad decision, but they will learn from those mistakes and take away valuable lessons that will be with them all their lives.
It is up to parents to be a money role model as money saving is not a part of the education system.