Just like all habits, smart money habits are best learned young. That is why it is as important to teach your kids the importance of saving money. This can be difficult as many adults today still struggle with building up a savings. A survey conducted in December of 2018 found that only 60% of Americans wouldn’t be able to pay for an emergency that cost them over $1,000. 40% said they wouldn’t be able to cover an emergency of only $400! These are telling numbers. While there may be other factors preventing Americans from being able to pay for these emergencies, having poor saving habits is likely a factor. To help prevent this issue in the future, here are a few quick tips to utilize when you start teaching your kids how to save.
Give them an Allowance
Teaching kids about money is easiest to do when they actually have money to use as an example. Giving them household chores they have to complete in order to receive their allowance will teach them to earn their money. Once you have it, you can begin to teach saving and spending. In addition to teaching about money, giving kids a chores-based allowance can take the burden off of you (as if teaching the kids to save wasn’t enough of an incentive). If they want something, they have to decide for themselves if it is worth spending their allowance on.
When I was a kid, I was given an allowance, but I had to split it. Half of it I got to keep to buy whatever I wanted, the other half was set aside and put into my savings account. At 9 years old, I thought this was pointless and I wanted the money. When I bought my first car, many years later, and used some of that savings to help make the down payment, I was very grateful that the money had been set aside.
Discuss Wants and Needs
I’m not sure there’s a person out there that doesn’t battle with the dilemma of buying for want and buying for need. There is a big difference between wanting new shoes and needing new shoes. Do you really NEED that candy bar? Younger kids may struggle with the concept of wants and needs, there are ways to teach them about wants and needs in terms they may understand. Teaching children the difference in wants and needs will pave the way for many healthy habits, financially and beyond.
Let Them Learn
Everyone makes mistakes. It is human nature to make mistakes and learn from them. While your children are young it is the perfect opportunity to let them make their financial mistakes. And, I don’t mean the overusing a credit card type of mistake. What I mean is when they buy a toy they ‘have’ to have, but you know they won’t play with it and then they find a way cooler toy later. They’ll probably pout, at least I would have, but there’s only one way to learn from a mistake and that is to make mistakes you can learn from.
Lead By Example
The biggest role models in a child’s life are typically the most prominent figures. This could include Mom and Dad, an Aunt or Uncle and even the child’s grandparents. By showing them the right way to save and not impulsively spending money, your children will take notice. Create a cushion and life will be far less stressful. I know it’s hard to not spend money. But you’ll thank yourself later. And so will your kids.
Teaching kids about money and saving young can help set your children up for financial success. Lucky for you, we can help! With savings accounts designed for all ages, we have the right savings account for your kids. Learn more about our savings options at https://centralnational.com/personal/savings.asp.