One of the most important lessons you can teach your kids is how to deal with money the right way. Many kids don’t get that lesson growing up, and when they become adults, it causes unnecessary hardship in their lives because they don’t know how to handle certain financial situations that may arise. A big part of those parental financial lessons should be about saving. Saving money is a hard to do if you don’t make it into a habit, so it’s important to get kids saving at as early an age as possible. Here are some fun ways to get your kids on board with saving.
The Power of the Piggy
One of the most basic forms of saving is simply the piggy bank. If your child is younger, start at this level. When they receive money for their birthday, or if you have them on an allowance, teach them to put some of it (if not all of it) into their bank. Teach them that they can’t just go into their piggy bank and get money out any time they want. This is a simple and very effective savings tool.
Divide and Conquer
When you give your kids their allowance each week, give it to them in one dollar bills. Have jars or envelopes with titles that represent their savings goals. If they have a specific item they are wanting, label a jar with that item. There could also be jars for “fun spending” and “giving”. When your kid gets their money, have them put a little into each jar. So if your child gets $5 per week, they have five bills and put one in each jar. Or they can put more into a jar if that goal is more important. This teaches kids to not only save money, but to work towards a goal and not fall into the habit of immediate gratification.
Open an Account
If your child is a little older, a good option might be to open them a savings account in their name. They can take their piggy bank stash that they have been so diligently contributing to and convert it to an actual bank account. This is not only teaching them how adults save money, it’s also teaching them the basics of banking.
Create a Timeline
Some kids get a kick out of knowing when things are going to happen. If your child is one of them, it may be beneficial to create a timeline of their savings goals. If they want a lego set that is $50 and they get $5 per week of allowance, chart out how many weeks it will take them to get to their desired $50. By knowing that it will take them 10 weeks to get to their goal and seeing that mapped out in front of them, it motivates them to keep saving because they can physically see the end result.
The Matching Game
A great way to teach your kids about how 401k’s work it by playing the matching game. Set some parameters for your child that if they do certain things, you will match their savings contributions. For example, you could say that if your child decides to put two dollars in their savings jar instead of their usual one, you will also put two dollars in their jar. If they choose to only put one then they forfeit the match. You can make the rules anything you want, but the point is to show them how employers match employees contributions to retirement. This technique also comes in handy when you have older kids who are trying to save for big items like cars or college.
Lead By Example
Perhaps one of the best ways to teach your kids about saving is to lead by example. Sometimes kids don’t always listen to what you say, but they watch what you do. While you don’t have to go into every single detail of your personal finances, it’s good to talk to your children about some aspects of them. Make sure they know that you have savings goals and that you regularly contribute to them. Tell them some of your goals and celebrate with them when you hit them. Give them your personal savings tips and techniques that help you along in your personal finance journey. Don’t just give them the highlights though. Tell them about some bumps you have had along the way so that they know that it’s not always a smooth journey to success. If you let them see that your are practicing what you preach there is no limit to your teaching influence on their finances.
Teaching kids about money isn’t always an easy task, but if you just install the basics of personal finance in them while they are young, you will be setting them up for success in the future.