Learning to budget and save money is an important part of adulthood, especially when ensuring your funds are being properly allocated and your bills are getting paid. After all, buying a house, a car, and raising a family is not cheap. And while, as adults, we know this to be true, how can we ensure our children learn to contribute to their savings at an early age?
How to teach your child to contribute to savings. Here are 3 parenting tips.
When getting your child excited about saving money, it helps to provide them with some incentive. In the same way banks offer interest rates when your account remains above a certain balance, you can offer to buy them a t-shirt, new piggy bank, or print out a certificate to celebrate their achievement. Once they've reach a set amount of money saved, reward them with an item of your choosing.
1. Create a chart.
Children are visual and get excited when they can see their accomplishments on a chore board or chart. Use this to your advantage. Create a chart with an item your child wants. Based on their allowance, determine how long it will take him to get that video game or the new bike he wants. Your child gains a sense of pride by seeing savings efforts progress and learns to associate that joy with saving money. Creating a lifelong emotional tie to the act of saving is a sure-fire way to get them to save now and in the future.
Before your child goes and spends all of her hard earned money on a pricey new laptop, remind her that once that money is gone, it's gone. Meaning, she won't be able to spend it on other things that come up, (and you aren't going to take pity and offer to subsidize her future spending). Naturally, you'll want to stop her from making such an expensive purchase, but if she chooses to go ahead with the big purchase, that's okay. It's her decision to make, and she'll learn the responsibility associated with making a large purchase when she's allowed to make them.
3. Talk about it.
Don't shy away from discussing finances around your children. Often, we try to shield our children from the harsh realities of life, including financial hardships. If you and your partner are having issues with cash flow, discuss ways you can stop spending as much money while your kids are in the room. Hearing you discuss savings, budgeting, and other financial matters will be a great way for them to understand the importance of being financially responsible and prepared.