Saving money is certainly a lifelong habit that helps people achieve financial wellness. As parents, it can prove beneficial to start teaching kids to save money early on, installing those great money saving habits.
Did you know that 53 percent of Canadians have little disposable income? When it comes to emergency funds, 28 percent of U.S. adults have zero savings. These statistics are alarming. Things may even be a bit worse due to economic hardships created by the COVID-19 pandemic.
This makes teaching kids to save money more important than ever before. To help, we compiled a few tips that may prove useful for parents that think it’s time to teach kids to save more and spend less. Let’s dive in!
1. Create Money Saving Goals
This is the first step when it comes to teaching kids to save money. Having goals is important, and as a parent, you are serving up a double life lesson here — saving money and the importance of setting goals.
Setting money saving goals also keeps kids motivated to save. If he or she knows what they want to save for, saving becomes easier in a sense. For instance, saving toward that new bicycle can be a far better motivator than saving money because you said so.
2. Wants & Needs Are Different
Following up on money saving goals, it is essential to discuss wants and needs when it comes to saving money and spending it. This is a great way to really instill those good money saving habits, because “want” is definitely different than “need.”
How can you drive this one home? Let’s say your kiddo has a smartphone, but needs a case to protect it. The “need” is the case, and saving toward buying one to protect that valued digital age asset is a must.
This can be an excellent money saving, life lesson to teach your kids. Want to drive a car? You need insurance. Want a smartphone? You need to pay for a fraction of the service. And the list goes on.
3. Where Will Savings Go?
This is more the physical space savings will be kept and reviewed by you and your kiddo. The traditional savings jar is a good option for younger kids, but going digital is also a good idea. This is because we live in a digital age.
You can utilize a savings app, like the Treasure app, to track savings, tasks needed to be completed to earn money, and more. This tethers digital with saving money, something kids will need to learn at some point down the road anyway.
4. Set Up Incentives For Saving
Kids will normally save money in order to buy something they want. Video games, toys, and more are all motivators for saving money. However, you can motivate them to save money long-term by setting up saving incentives.
You can think of this like a retirement savings match, like a 401k, where you match savings contributions kids make.
Let’s say your kiddo saves $30, but that $20 toy itch is overwhelming. Instead of him or her buying the toy with their hard earned savings, you can offer to match $20 if they put that money into a savings they promise to not touch for one year. Each time they divert money into that account, you match it, helping them learn long-term savings.
5. Make Saving Money An Ongoing Conversation
Most parents today give their kids allowances. They get X-amount of money for X-chore. However, the conversation often stalls after the allowance is set. If it’s time to teach your kids to save money, you need to make the conversation ongoing.
For example, you can have financial check-ins, sitting down with your kid to discuss how much they have saved, goals for spending, contributions made to savings accounts they are not allowed to touch, and more.
You can even set a good money saving example by sharing with your kid the money you have saved, costs, and other family financials. Communication is the key in all things parenting, so keep those communication lines open.
Teaching Kids To Save Money Builds Good Long-Term Financial Habits
The above 5 tips to teach kids to save money can prove worthwhile. From setting up saving goals to matching long-term savings amounts, saving money tips like these do more than teach kids about finances, but also about life. What money saving tips have you used with your kids? We would love to hear from you.