Starting early can make a world of difference when it comes to teaching children to save and make sound financial decisions.
Luckily, there are simple ways to teach kids about money and help youngsters learn smart saving techniques. Here are some approaches to teaching children the valuable art of saving.
1. Teach kids about money with actual money
In a world where anything can be purchased with the swipe of a card or typing of a password, the simple reality of cash can help teach the value of a dollar. That’s why using physical currency can be a smart way to teach kids about money. Counting coins and bills can also help preschoolers with hand-eye coordination and math skills.
2. Give an allowance
Giving children their own money is a good way to start teaching them how to save. Kindergarten is a great age to start a weekly or monthly allowance. A good rule of thumb is to pay $1 for every year of their age, so the incentive grows as they do. Make sure the allowance is based on completed chores, though. That way, kids understand that money is earned.
3. See the savings
Using a clear container as a bank can help give kids a sense of accomplishment watching the coins and dollars stack up. Make goals visible by marking a line on the side of the container as a target to reach. Not only does this teach children about saving, it makes reaching goals exciting and fun!
4. Teach children to allocate their savings
To introduce money management, as well as delayed gratification and charity, encourage your child to divide their money into three piles: savings, spending and sharing. You can do this online with the website Threejars.com, where kids can track their earned allowance and even earn interest on savings.
5. Set saving goals
Help your child develop savings targets to make sure savings isn’t an open-ended concept. The first goals should be reachable, fun and defined by both the parent and child. Sure, it may seem silly to save for a small toy, but the sense of achievement is worth it.
6. Teach kids about saving money in a bank account
As your child matures and has accumulated at least $100 in long-term savings, look into a bank savings account. Most major banks offer children’s savings accounts that can be opened online or at a local branch. A trip to the bank may be a new and fascinating experience for your child, inspiring a sense of maturity and financial responsibility. It’s also a great time to teach kids about other money concepts, like interest and risk.
7. Have conversations about saving
The best tool for money management is conversation. Parents should talk to their kids about money matters like budgeting and investing. Aim to mirror good money behaviors, but remember it’s also okay to admit to your own money mistakes.
Show your kids what smart money management is. Visit Nationwide Bank for information on banking, investing and more.