Generally, children do not know much about spending and saving money as well as the value of money unless they are taught.
As a parent, it is necessary to teach your child how to spend wisely and save money for future use. These are crucial life skills you should teach your kids earlier in life. The concept of managing money is one of the most important skills that every child should possess even before progressing to pursue formal education in schools.
Many people are in bad debts today because they were not taught the art of managing their money wisely in early stages of their lives. If you want to prevent such an occurrence in your child’s life, the following tips can help.
Teach the meaning of money to your children
It is quite hard for your child to see any logic in saving if they do not understand the real meaning of money. Therefore, it is important that you should educate your child on what money really means, its
importance and significance in the economy, and its value. This way the child will comprehend that money is a necessity for survival and success, and as such will appreciate the art of saving money.
Use simple terms when explaining the meaning of money to your child, particularly if the child is very young. This teaching should be done frequently using real life examples that the child can easily relate to.
Give them an allowance
Obviously, for your children to start saving, they have to have money of their own. When giving your child an allowance ensure that you do not tie it to any task or chore. This is so that the child does not presume that they worked for the money and can thus spend it as they wish. Allowances need to be independent so that the child learns how to save and manage it accordingly.
You may, however, "pay" your child a small amount of money for tasks and random jobs done at home to increase their savings. In later stages of life, your child can start earning his/her allowance as a way of encouraging hard work and responsibility.
Help them create their savings goals
Saving without a goal is similar to purposing to fail. This is because goals motivate children to save more and frequently to reach their targets. Therefore, it is important that you help your child create their saving goal depending on the targets they want to achieve. Draw a progress sheet for your child to record his/her savings and monitor all progress made towards saving more frequently and higher amounts. You should motivate your child during the process as well.
You can have your child save for something they want to acquire such as a fancy toy or bike. This helps the child in understanding the reason behind saving. Also, let the child account for each cent you give him/her to ensure that he/she does not end up spending the savings on things that are of use and value to them.
Save with them
Encourage your children to save by saving alongside them. If your child has a savings target of 50 Pounds, you should save with him/her pound-for-pound until they hit their target. This will motivate your child to save more as well as see the need and importance of saving as you are doing it alongside him/her. It is hard to prove to your child that saving is crucial in life if he/she does not see you saving.
When saving with your child, you should ensure that you are willing to cap the amount of savings you are matching with that of your child. This is because you might find yourself struggling to keep up with your child’s savings especially because you have other financial commitments in addition to saving.
Play money games
Money games are exceptionally reliable and useful tools to use in teaching children important lessons on how to manage money. These games are great for teaching children that they necessarily need not
spend all the money they have as the future may be uncertain and may, therefore, need to have some savings.
In addition to this, money games also teach children on how investments and savings can possibly pay off in the future. This serves as a motivation for the children to save more and make smart financial decisions that are aimed at enabling them to have a great financial life. Common money games that you can play with your child include LIFE and Payday among other games.
Establish financial independence
Even at an early age, it is necessary to establish independence in your child’s financial life. This can be done by stressing the importance of spending money wisely without blowing or wasting it on things they hardly need or those that they can do without. Ideally, financial independence is only possible through prioritising on what is important and foregoing what is not important.
Allowing your child to spend his/her money on whatever they wish is an efficient and reliable way of letting them learn from their mistakes. Consequently, this will make it easy for them to acquire good financial behaviours that will eventually lead to financial independence.
Use money apps
In the present technological times, there are practically apps for every aspect of life including money. As such, it is advisable that you engage your child in using money apps specifically designed for kids. There are lots of apps such as Savings Spree that are very educational in crucial money skills such as saving, setting monetary goals and even in investing.
You can also consider getting virtual progress sheets that your child can use in tracking their savings and the saving progress that he/she is making. It is worth noting that these apps may also provide worthwhile ideas to children on how to spend their savings constructively and for beneficial gain.
The best thing about teaching your child how to save from an early stage in life is that the child will grow with this skill and be able to manage his/her finances better in life. In advanced stages, you can teach your child complex money lessons such as the concept of credit, borrowing, and lending. If you teach your child how to save right from a young age, it will become easy for him/her to prepare for an independent financial future.