Learning to manage and value money is an important life lesson. We all want our kids to be financially responsible, and teaching your kids to save is a key part of money management.
Once your children reach four or five years old, they are likely to be ready to begin learning about money, its value and how to manage it responsibly.
These tips will help you teach your kids the valuable discipline of saving. You might even learn a tip or two as well!
Top Tips For Teaching Your Kids to Save Money
1. Give Them Their Own Money To Manage
Let kids manage their own money! But how?
Well, if pocket money is something you do in your family then this is a great option, alternatively you may want to create a system where your little one can earn money by ‘working’ (otherwise known as household chores) around the home.
The amount of money they earn isn’t really the important part.
The key point is that they learn where money comes from (earning it vs gifts) and how it can be used (saving, spending or giving it away).
2. Spend, Save, Give
A great way to help children manage their money responsibly is to split their “income” into three parts.
One portion is allocated to spending, another to saving and one to giving/charity.
You can discuss the percentage allocated to each portion together. The spending money is for immediate wants such as a movie out, canteen money or an ice cream at the beach. The saving money is set aside for a specific goal (such as a toy they want to buy) and the giving money is for charity or other gifting.
This system is a fabulous way to teach kids what their money can do for them but also how their money can help others.
3. Help Them Set Goals
Just like having a goal to work towards as an adult helps us save, kids also love goals. Perhaps there is a special toy they’ve been longing for or an outing they’ve wanted to go on. Help your kids to set a goal and work out a plan for achieving it.
Depending on their age and how much money they have access to, you might decide to match them pound for pound towards their goal or allow then to earn extra money through additional jobs.
A chart tracking their progress can also be an easy visual reminder of their progress and help keep them motivated.
4. Let Them Make Mistakes
If you constantly rescue your kids from poor decisions then they will never learn the consequences of their choices. If your child is saving towards a specific goal but then drains their savings for money to spend on sweets on a whim, it is a great chance for them to learn that once you spend your money, it is gone.
5. Lead By Example
Kids learn by what we do, not what we say.
If we never show any self control when it comes to spending and don’t make wise choices with our own money, then they will learn those habits from you.
Talk to your kids about how you manage your own money. Where does it comes from, how does it get spent, how much goes on “needs” vs “wants”.
Get them involved in opening bills and learning how the things we use each day cost money. As they get older get them involved in grocery shopping, budgeting, getting the best deal on insurances and bills.
The more you can involve them in everyday money choices, the better equipped they will be to manage their own money responsibly into adulthood.