Parents can greatly influence the financial behaviors of their kids and they have to take the onus of bringing up a generation of cautious spenders, wise savers, intelligent investors, and mindful consumers. Little hands save big! Read to know how to teach your child to save money.
Of the many things that the school does not teach us, saving, gaining financial independence and more importantly building wealth is one of them. Saving money is one of the most important aspects of having a secure financial foundation. Unfortunately, most of us learn the importance of saving right and investing wisely the hard way, trial and error and through experience.
Starting young definitely gives an individual an edge over others. As a parent, you must take the initiative to teach your child the importance of money when they are young and of an impressionable age. Parents are the number one influence on their children’s lives and they can make the most of the times when they are imparting knowledge to their kids and introduce money and how tending to it can really turn their life around.
Warren Buffet, the finance wizard, has often emphasized the importance of saving when you are young. He opines that saving early is more important than IQ for a young person. In fact, in one of his interviews, he shared that he himself started saving very early in life and it really paid off.
Here is how you kick start a habit they will thank you for the rest of their lives.
As kids we all proudly owned a piggy bank and would love to put money that elders gave us into it. Kids love plants, so you can illustrate just the way plants grow when you look after them and water them, money too can grow. The piggy bank is like their private bank account and that the more they save, the more their money will grow.
Once the piggy bank is full, take your child to the bank and open up a savings account for them. Have them count how much money they have. It can be extremely exciting for kids to know that the money they lovingly saved would grow over time provided they don’t touch it. If you have older kids, you can tell them about how interest works too in a way that they can comprehend.
Visuals have a great impact on learning and create lasting impressions. Also, it becomes a constant source of motivation to work for. A transparent jar where they can actually see their money literally piling up each day will keep the tempo high.
Another interesting idea you can incorporate while using the savings jar is using their savings to buy their favorite goodies. For instance, they wish to get a fancy action toy figure or any other high-end toy, you can paste a sticker of their dream toy on the jar. Tell them that they will have to save up for it. They can keep aside some amount from their monthly allowance and put it in the jar. The older kids can own a jar for each of their desired purchases. This not only encourages them to save but also prioritize where they should spend their money.
So if you give them say Rs 30 a day, they can put the entire amount in one jar or split the money and place it in different jars for different saving goals.
4. Practice what you preach:
Children learn best by example. You are role models for your kids and they watch you well. So if you want to teach them about saving money, save money yourself. Ask them about what they want to save up for. Even if it means having your own jar of money where you put funds. You can become their saving buddy. Tell them the difference between needs and wants, especially when you take them out for shopping.
Teaching kids how to save money may seem like a daunting task. But, we are sure, with these tips, you can make widen your child’s horizon and make money a resource rather than reserve.
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