Teaching good spending habits can be a struggle. In a world where online shopping, cards, and internet banking are the norms, it shouldn’t surprise us if children don’t have the most excellent or near-to-good spending habits.
So, in light of National Children’s Day, let’s work out a game plan to make saving a regular part of your child’s routine. The perk? It lays the foundation for a bright financial future.
Developing your child’s mind about finances will encourage them to think efficiently and make better choices later in their lives. The tips outlined below are a good place to start.
Discuss Wants Vs Needs
The first step in teaching kids the art of saving is to help them differentiate between wants and needs.
Talk to them about how needs are absolute necessities like food, shelter, clothing, healthcare and education. And how wants are all the extras—Xbox, Fifa, Barbies and more.
Make Them Earn Their Money
Assign chores to your kids and reward them with pocket money on completion. Offering allowances in exchange for chores teaches them the value of money and hard work.
If you want your children to become savers, allow them to earn and save money. It helps think twice before spending it and they learn how to use it wisely.
Give Them a Savings Space
Younger kids can load up in a piggy bank.
Wherein the older ones can stash their cash in a checking account or a savings bank account
That way they can keep an eye on how their savings are adding up. This also helps them keep tabs on the progress they’re making toward their goal.
Have Them Track Spending
A part of saving is knowing where your money is going.
Leave Room for Mistakes
Have your kids write down their purchases each day and add them up at the end of the week. Encourage them to account for their spending. Also have conversations about how much faster they can reach their savings goal if they changed spending patterns.
Now that you’ve allowed your kids to control their own money, allow them to also learn from their errors.
It’s super tempting to step in and grab the steering wheel when they’re about to make a potentially costly mistake. But that mistake can be a teachable moment.
When all’s said and done, sit back and watch, as you have prepared them on what to and what not to do with their cash.
Act as Their Creditor
If your child wants to buy something and is being impatient about saving for it—become their creditor.
You could “lend” them the money and require a payment from the allowance you provide, with interest. This will also prepare them for student loans in the future.
Meanwhile, also teach them about delayed gratification, and how the item they want to buy will end up costing less if they wait.
Talk About Money
If you want kids to learn about saving, it has to be an ongoing discussion. Schedule a weekly check-in to talk about money. You could even get creative and make money charts to track savings and discuss savings strategies with them.
But the key is to keep the conversation going.
Set A Good Example
During their early years, children closely observe adults and mimic their actions. Use this to your advantage and try to be a good and real role model—financially of course! Have an explicit and open conversation about money with your children. Talk about building good savings habits and how it will bring big dividends in their lives.