Teaching your child the importance of saving money, and how to do so, is a life lesson that will shape their financial future and lead them to financial independence. When saving becomes part of their routine at an early age, it’s a habit that will continue through all stages of life. So, consider the following tips when teaching your child about saving:
1. Teach by example
Children learn by mimicking the actions of others, so it’s important to set positive examples of financial responsibility. To teach them the basics, demonstrate how you earn, spend, save, and give. Show them real life examples of the benefits of saving money, whether it’s putting money in your emergency fund for when something goes wrong, saving up for a fun family vacation, or simply taking a trip to the ice cream shop.
2. Cash is a teaching tool
Limit your handouts, and instead let your child earn cash by completing chores or helping out around the house. Encourage them to count the money and separate it into clear jars for saving, spending, and giving. Cash is tangible, and the concept of seeing physical money grow will resonate with them.
3. Open a savings account
When your child is old enough, take them to the bank with cash they’ve earned and help them open their first account. Teach them how to read the statement and show them how the balance grows each time they make a deposit. The sense of pride and responsibility that comes with having their own account will be another incentive to keep saving.
4. Set goals and save up
Have your child make a list of items or experiences they want to save for and be sure to include the price and timeline. Review the list together and decide what the first savings goal should be. Choose an inexpensive item with a short-term “save by” date. This will not only teach your child how to save but also show them how to prioritize financial planning. Have your child deposit money into their savings account each time they earn money or receive it as a gift. Once your child has saved up enough money to meet their goal, take them to the store with their cash to purchase the item themselves.
5. Saving can be fun
Praise your child and use positive language to verbally encourage them. Bring them to the bank with you and make it an exciting outing for you to do together. Let your child decorate their money jars or piggy banks to really make them their own. These things will encourage them to take ownership of their money and decisions, helping them continue saving and making smart financial choices.
When it comes to teaching your child about the basics of saving, it’s important to remember to start small, have conversations often, encourage good decisions, and lead by example. Taking these steps will help ensure that your child is on the right path for a successful and stable financial future.