When you decide to tighten the purse strings and start saving, you have to make several changes to your family finances. The chances are that you will work on increasing your income streams and reduce your expenditures. For your grand plan to work, your kids must be on board. Teaching children crucial money management skills gives them a better shot at financial success in their adult years. Here are tips to educate your little ones on money management.
Set Financial Goals
If you don’t know where you are headed to, how would you possibly get there? The moral of the story is that the first step towards creating a budget is creating goals. As much as it may sound cliché, you need both short and long term goals. Before approaching your kids, decide on the things you would like to feature on the goal list. Next, ask for your little one’s opinions on what they want to have. That way, you will have common goals to save towards.
Use a Shadow Box
Children are naturally visual. Putting the savings in a bank account may not give them a full picture of meeting financial goals. The best way is to find a physical item where they can insert the money they have saved. Get a box and attach a representation of the goals. It can be a bicycle, a vacation destination, or anything else that you have agreed to keep. Make a slit at the top of the box. That way, they can see their goals and the money they are putting away.
Match the Offerings
If you can afford, consider encouraging your kids to save by offering an equal, double, or even triple the amount they put away. In most instances, the money will be minimal, but it will go a long way towards persuading them to be money cautious. Your little ones will be excited to count up the savings jar because they know that the more they have saved, the more you will give them.
Don’t Let Them Save Everything
Although teaching children to have a saving culture is vital, you need to instruct them on how to balance. Don’t allow them to put away everything they have, which is where budgeting comes in. Making an elementary kid donate all of their allowances will give them a negative notion of saving. Instead, work towards a percentage that both the kids and adults can live with. You may settle on telling them to save thirty percent and spend the remaining seventy percent.
Make Sure They See the Fruits
If your goal was to save money for a bicycle, make sure that the plan goes to a conclusion. Besides, they put in the extra effort of donating their allowance. If your child doesn’t see the fruits of their labor, they will get the impression that saving is a hoax and not a smart way of handling money. In case you don’t meet the financial goals, explain it to your kids and let them decide an alternative way of using the funds.