As parents, you have the incredible opportunity to shape your child’s habits, attitudes, and behaviors – especially when it comes to money management. One of the money lessons we want kids to learn, not only through observation, but with practice, is saving.
Instilling a savings habit at a young age could very well be one of the most valuable things you teach a child. This is because we are creatures of habit. We just need to build the right ones. Here are 5 best savings tips your kids can surely benefit from.
Pay yourself first.
Always encourage kids to pay themselves first. This means they’re putting money into savings before they have an opportunity to spend any of it. Have them think of it as a payment. Any time they receive money, their savings payment must be made. While they may not be on board today, their future self will be glad they did.
Set a goal.
Putting money into savings doesn’t mean much when we don’t know what we’re saving for. Begin with the end in mind by helping kids set a goal. Determine together what they’ll save for and how much will need to be saved.
Keep them motivated by encouraging them to focus on what it will feel like once their goal is met, and don’t let them lose sight of that.
Help your kids begin practicing the art of budgeting by allowing them to decide how they will share, spend, and save their money. Set up accounts, jars, or envelopes for different items to not only help with structure but give their money purpose. Be specific and give each account a name to help them stay motivated and help deter unplanned withdrawals.
When kids have enough money to make a purchase, they are often quick to make the expense. Teach kids to use their money wisely and avoid impulse buying. Kids should aim to compare similar products, read product reviews, and use coupons whenever possible. Spending, whether frequent or sparse, should always be well thought out.
If your child has a savings account, have them review their monthly or quarterly statement. Children should recognize the importance of keeping up with their accounts. In addition to looking at balances and dividends earned, kids should learn to watch for errors. Anything out of the ordinary should be addressed immediately.