As a parent or guardian, you understand the value of teaching your children to budget and save. However, convincing kids to save their money instead of immediately spending it on a new toy or treat can be difficult.
Help kids understand the importance of good money management with these tips.
Create Good Money Habits
According to Forbes, children begin to develop money habits as early as age seven. The Save, Share, and Spend Method can be a great teaching tool for kids to learn how to budget.
It’s easy to get started. Have kids create Save, Share, and Spend labels to place on separate jars or piggy banks. Any time they receive money, have them divide it into the jars on their own.
Explain that the Spend jar is intended for buying items they want or need or to put away money for short-term goals, the Savings jar is meant for items with bigger price tags or for their future, and the Share jar is meant to give back to the community.
To encourage saving, you can even consider paying kids interest on deposits made to their jars or piggy banks.
Set a Goal
There’s no better way to motivate kids to budget and save than by trying to encourage your child to reach their goals. Encourage kids to come up with an attainable short-term goal, project costs, and develop a plan for saving their money.
Consider printing an image of what they want and placing it in their bedroom or near their spend jar so they’re constantly reminded of what they’re working toward and are less tempted to spend their money on trivial things.
Lead by Example
It’s great to talk to kids about budgeting and saving, but it’s more impactful when they see parents or caretakers create and follow a budget. An easy way to illustrate the concept is by getting them involved with shopping.
Before going to the store, create a list of what is needed and determine how much you’ll spend. You can even review store ads and search for coupons for additional savings. While at the store, make sticking to your shopping list and budget a team effort.
Use a Savings Account
Another way to get kids interested in saving is by showing them how their money can grow. Consider opening a Youth Savings Account that earns dividends to get kids excited about learning and managing their money.
When you visit your financial institution, bring them along and allow them to make decisions regarding contributions to their savings account. To encourage continued savings, periodically review statements together to track progress and interest earned.
Teaching children to be money-savvy is a process that takes time. With effort and consistency, you’ll help instill good financial habits that will help them for years to come.
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