Healthy financial management and saving money are few lessons often not stressed during childhood as much they need to be. Some learn it watching their parents and some grow up without an intuition towards and end up poor in savings management.
It is surprising to see this important lesson isn’t a part of our school curriculum. But there are ways to help our next generation understand that a rupee saved is a rupee earned. In this article, we will help you teach this valuable lesson to your young ones.
5 ways to teach kids about saving money
1. Get them a saving jar or piggy bank.
A piggy bank or a saving jar can be a great way to teach your kids about saving. Give them the objective to fill up the piggy bank and donate some from your own pocket as a reward to get them a toy or a bicycle they want. Similarly, make it a habit for them to maintain saving jars for different goals along with learning skills. Give them money and let them decide if they want to put all the money in a jar of a single goal or distribute it into jars of different goals. This helps them learn prioritization and smart investments at an early age.
2. Open a bank account
Once they are comfortable saving in jars and piggy banks, open up a savings account for them. Have them count how much they deposited and give them larger goals like motorbike or college fees. Make them count how much they have saved and how much they need from time to time. Having a bank account is a great responsibility and it can provide them with the motivation to save and spend wisely.
3. Create a timeline
One way to keep money lessons ongoing is to create a timeline so that your child can visualize when they will reach their goal. Show them how much they need to save from their monthly allowance to reach the goal faster and also teach them about different ways of earning money. For example, if they save 100% of their allowance every month, they can reach a goal in weeks, and at what percentage saving will they reach the goal in the desired time. Keep reminding them how much they have to save in the upcoming months if they want to reach the goal early.
4. Lead by example
Children learn by example, so the best way to teach your child about saving money is to save money yourself. Have your own jar of money that you put funds in regularly. When you’re out shopping, show your children how to discern between various prices and explain why buying one item makes better sense than another. Teach your kids how you are saving for their college education or your next property or a holiday.
5. Start a conversation
In India talking to your kids about the financial situation of the family or money, in general, is not a habit and is often considered a taboo. Let your children know they can have an allowance, but it’s up to them to save up for things they really want. In addition, illustrate how much their money can grow over time if they save. Also, discuss the difference between needs and wants and tell your children you are always open to talking about money and new ways to save. Ask them about what they want to save up for. Ask them what they want their future to look like.
Children are likely to adopt the attitudes and behaviors of their parents, so remember how you talk about money around your children. Think of your best shopping when your kids are around. Will you save or spend money for free?