Saving money is a key financial skill that’s important to have, especially as you get older. It can help you achieve goals like buying your first home or saving for retirement. But sometimes, it can be hard to teach kids how to save money when they’re so used to getting everything they want right away. Here are five tips on how to teach your child the value of saving money:
Understanding the difference between Wants and Needs
- Teach your child the difference between needs and wants.
- Explain to your child that needs are things you need in order to survive, such as food, clothing and shelter. Wants are things that are nice or fun to have but not necessary for survival, such as toys or treats.
- Introduce them to the idea of delayed gratification by explaining that they can’t have everything they want right away–instead, they should save up their money until they have enough saved up so they can buy the item they want without having to borrow money from someone else or go into debt. This will help explain to them the value of saving money so that when a situation arises where something expensive breaks down (like a car), then there will be some savings available for them instead of having no reserves at all with which one could purchase another vehicle simply because it broke down unexpectedly!
Set saving goals
To be successful at saving money, you need to set goals.
- What amount do you want to save each month?
- How much would be a good savings rate for each year?
Set a goal for how much money you want and by when. This can be done by taking time off work or shifting your budget around, so there is more room for savings. These small changes can make a big difference in your financial health later on in life.
Keep track of spending.
Keep track of spending. This might seem like a no-brainer, but keeping a record of your spending is important in teaching kids how to manage money. You can do this by keeping a budget or by using an app or spreadsheet. Either way, it’s helpful for them to see where their money is going and get a sense of what they spend most on each month.
Lead By Example.
You should lead by example if you want your child to learn how to save money. If you’re spending all of the money they earn or getting them into debt with their credit card, don’t be surprised when they do the same thing. Tell them how to use a debit card responsibly and understand that there are some things that should be purchased with cash only. The easiest way for your child to learn about saving money is if they see you doing it yourself!
Open a savings account.
The first step to teaching your child about saving money is to open up a savings account for the family. This can be helpful for many reasons, including:
- Encouraging your children to save their money in a special place
- Modeling good financial habits for your kids
- Teaching older children about earning interest on their funds (if they’re old enough)
Speaking of opening a savings account for children, many people ask, “how old do you have to open a bank account?” As experts at SoFi say, “each state can have its own regulations regarding accounts for young savers and, depending on the state, financial institutions also may have the ability to set their own rules.”
The earlier you can teach your child to save, the easier it will be for them to grow into a financially responsible person. The key is to make saving money fun and exciting, so they don’t get frustrated or discouraged by their efforts. Children are natural learners, and if you keep things interesting, they will learn quickly!
