How to Teach Your Kids About Saving Money

iQuanti: Money habits are developed at a young age. How kids see their parents talk about and interact with money often has an outsized influence on their future financial habits. That's why it's so important for parents to start educating kids about money management at a young age. Here are six ways to teach your kids about saving money and set them up for a lifetime of financial success.  

Set Up a Savings Account  

The best way to teach kids to save money is to let them do it. Providing them a place to save is step one.  

This doesn't have to be a formal savings account at a bank, but it can be. You can also create a savings account using an envelope or jar where you're the banker. What matters is that kids understand there's a designated space where they can put their money for safekeeping.  

Offer Incentives to Save  

If you're tracking savings at home, consider giving kids interest like they'd receive at a bank. For example, you could offer to give kids a quarter toward their savings each time they save $5. Sometimes even a small incentive can jumpstart savings goals and encourage kids to stay the course.  

Help Kids Set Savings Goals  

Adults and kids alike are driven by purposeful saving. That's where creating goals comes in. You can help kids set savings goals by asking them the types of larger purchases or charitable contributions they want to make and how much.  

Once kids have a goal in mind, help them set up a recurring savings amount to help them reach it. Then, don't forget to follow up with them to track progress over time.  

Introduce Larger Financial Concepts  

As kids dip their toes into saving money, it's a great time to talk about larger financial ideas. Kids may only have the opportunity to learn about topics like emergency funds, retirement savings, or term life insurance at home. Therefore, it's important for parents to regularly discuss how and why they use these financial concepts and products. Then, as kids get older, they'll already have a base of financial literacy, and you can encourage them to explore more for themselves.  

Let Kids See You Spend  

Teaching kids to save is critical, but they'll also need to understand what that saving ultimately goes toward. So, involve kids in your spending process. For instance, if you're purchasing a new family TV, bring your child along as you look for sales, negotiate the price, and make the purchase. Seeing you buy something from start to finish can help kids establish a similar mental flow when it comes time for them to spend the money they've saved up.  

Allow Opportunities to Learn  

As parents, it's instinct to want to protect your children — but sometimes financial mistakes create wonderful learning opportunities. For example, if kids want to spend their savings accounts on something you disagree with, maybe that's an okay mistake to let them make. Often, financial missteps at a young age can head off much bigger financial mistakes as adults.  

The Bottom Line  

Saving money is an important financial concept at any age. But teaching children young means they'll establish great financial habits and reap the benefits as they get older, as well as developing comfort with financial products like bank accounts and life insurance.  

Remember that kids are easily influenced by what they see their parents doing. However you decide to teach your kids about saving money, it's critical that you practice what you preach.  

Source: iQuanti, Inc.

Share:


Categories: Personal and Family Finances

Tags: family finance, insurance, personal finance, savings