Nearly 30% of our neighbors live on a paycheck that barely covers rent and basic necessities. This is an uncomfortable figure for any parent, because it can make you wonder about your own child’s financial future.
Because one-third of all Americans have poor credit, it’s a good idea to start early when it comes to saving money and building good financial habits.
Here are a few simple ways to teach your kids about saving money.
Differentiate Wants From Needs
One of the best first steps when talking with children about money is to help them distinguish their wants from their needs. You can use your own budget here to help explain how wants like candy, movie tickets, etc., have to take a backseat to needs like food, basic clothing, shelter, and so on. Teaching them about this subtle difference can help them make those tough choices later on.
Help Them Understand the Value of Hard Work
According to Investopedia, two-thirds of parents paid their children an allowance in 2019. Spending a few hours on chores each week can allow your child to earn $20 or $30. This is a simple and effective way to help children understand the value of both money and of their own hard work. Starting this process early on can provide them with a bit of a safety net that lets them learn first-hand how to spend their money wisely.
Establish Goals For Savings
Making saving a goal-oriented activity means it’s more likely that a child won’t get bored with it. If they decide there’s something they really want to buy, they’ll quickly learn how much they’ll need to save up to buy it for themselves. Saving without a pre-defined goal can seem pointless to a child, so helping them figure out what material things matter enough to them to save for can help keep them engaged. It can also help them keep their eyes on the prize, so to speak, and prevent them from wasting their hard-earned money on lesser rewards.
Help Them See Their Savings Grow
Saving money can look a bit different depending on the age of your child or children. For very young kids, a piggy bank or coin jar will work just fine. When your children are older, however, you can bring them to the bank to set up a checking or savings account. Keeping track of how much they’re saving and seeing those pennies or numbers accrue can allow them to feel excited about their financial future.
In the end, getting children acquainted with money early on will help set them up for a secure and bright financial future. By teaching good financial habits from the start, you’re helping your kids avoid many of the common long-term credit and general financial issues that plague younger — and even older — people in modern society. Always make sure your children are engaged and interested when you teach them about finances, and be sure to provide a safe space for them to learn and grow as they begin to understand money.
It’s recommended that you update your estate plan once every five years, barring any major life events like marriage or moving states. By setting a good example and making sure all of your financial affairs are in order, you also make it more likely that your kids will follow your example and have some kind of financial cushion available for when they themselves get older.
Finally if you want more on this topic, consider reading kidwealth.com. Its a nice little website devoted to parenting and money. Its well worth the read.
