Your kids can learn how to save money easily, especially if you teach by example. Handling money offers people of all ages the opportunity to make effective decisions for their future. The every day spending patterns that you employ can educate, motivate and empower your kids so that they effortlessly learn to become regular savers. Teaching children how to invest at an early age will enable them to be smart about their money so that it becomes automatic that they keep more of the money that they work hard for.
Introduce Money Early
soon as they can understand how to count, introduce your kids to money.
Actively and regularly provide them with information about finances.
Use shopping trips as opportunities to teach about money. When you make
purchases with them, explain the process. Demonstrate to kids early
about planning purchases ahead of time to get the best deals. Show them
how to assess value and quality when shopping. Let them participate in
transactions so that they understand the give and take system.
Differentiate Between Needs and Wants
to your kids about the value of money by ensuring that they understand
its importance. Let them know that everything you have in your house,
the food you eat and the things you do, all cost money. Show them the
difference between something that is needed, such as food from a grocery
store, and something that is wanted, such as eating at a restaurant.
This will help them understand that there are choices and alternatives
when making decision purchases.
an allowance for your kids. In exchange for chores done that contribute
to the family (rather than simply cleaning their room), offer an amount
of money that is realistic for them to spend within a week's time. Give
them small bills so that they can easily be shown how to set aside some
of it in a piggy bank. Reward kids with extra allowance whenever
possible and encourage them to save it for something they want. Design
incentives so that they are motivated to earn more to save more.
your child asks to buy something, explain that they can save for it
with their allowance. Show your kids what a savings account is and
explain how it grows over time. Demonstrate what a savings bank account
can be used for, like emergencies, major purchases and long term
savings. Take your children to the bank to open a savings account.
Explain how interest works and encourage them to set aside part of their
weekly allowance to put into the bank account. For example, if the
allowance is $5 a week, suggest that $1 be set aside for savings.
Schedule Money Discussions
a regular schedule to have discussions about family finances. Talk
about spending in the home, savings accounts and interest earned.
Discuss what things cost and demonstrate ways to save money by being
careful about things like wasting food and other resources. Use this
opportunity to teach kids about differences between cash, checks and
credit cards. Demonstrate wise spending decisions and habits. For
example, heed warnings on using credit cards liberally and teach them
that when used, credit card balances should be paid off monthly before
interest charges incur.
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