Money doesn’t grow on trees, yet it makes the world go around. Whether you love it or not, there’s very little you can do without money. Unfortunately, it can be a hot mess to deal with if you lack essential financial skills. Many people find themselves in money problems because they were never taught how to manage money, and now they have to learn from their experiences.
Every other April, American bankers set aside one day to celebrate “Teach Your Children to Save Day.” While this day comes once a year, it is vital to make every day a “Teach Your Children to Save Day,” or at least take advantage of opportunities to train them saving techniques when they arise.
Explain Where the Money Comes From
Before you get into the topic of saving 101, start by clarifying that money doesn’t come from mom or dad’s wallet. Rachel Cruze, who is a co-author of “Smart Money Smart Kids” and a financial expert, acknowledges that children should understand the relationship between money and work. Demonstrate repeatedly that you get paid when you work.
Saving Goes Beyond Having a “Save Jar”
The next step is to teach your little one the three financial principles: saving, giving, and spending. Giving and saving should be given precedence to expenditures. Train them to cherish giving from a tender age. Explain why it is essential to set aside money for the three needs the moment they receive it. Remind them that once cash is gone, they can’t recover it. Making mistakes is allowed, but the errors should help them to do better next time.
Writing Goals Encourages a Saving Culture
Saving is more effortless when you have goals to attain. Train your children essential goal-setting skills so that they understand how much is available to spend after saving. Talking about goals is not enough. They should write their targets down to make them more tangible. You can even divide the total amount they require eventually into a few weeks and then print the sheet. That way, they can tick or cross against their weekly saving goals.
Use Motivation Tactics
Think about the things that motivate you to save. For most people, the interest their money earns is their sole motivating factor. Unfortunately, the interest that banks offer is too low and may not give your little ones the morale they require. That is where you come in. Consider promising your child some interest on the amount they manage to save, such as ten percent. That way, if they save $10, you will give them an extra $1 to encourage them to save more.
Stories That Inspire
Besides setting goals and giving interests, consider narrating how you managed to save for stuff. Stories are often educational, and they instill saving culture in children. Talk about how you saved for your first car and other purchases. Give them a chance to have a feel of what saving means in the adult world. You can also read books that highlight the benefits of saving together.
Work on Your Saving Culture
Young kids do more of what you do than what you say. Although it may not seem like it, your child is observing how you manage your finances. If they realize you don’t save money, they will not be motivated to do it either.