Teaching Kids to Save Money
Life is unpredictable. However, it is the unpredictability that adds flavor to it. Somehow, you never know what will happen next. In today’s ever-evolving and practical world, having the ability to know how to handle money for both satisfaction and comfortability helps us guide ourselves through the maze of life.
It is true that money is not everything, but you need money for everything. Margolis & Myrskylä of the Department of Sociology, University of Western Ontario and Max Planck Institute for Demographic Research, mentioned that when it comes to the financial aspect of our life, satisfaction tends to increase along with our age. However, only a few are anticipating and pointing out the value of saving money on an annual, monthly, or weekly basis, which is the main viewpoint of making money and fulfilling the variety of needs in a world of scarcity.
To others, teaching children to save money at their young age may seem a bit early. Adults might think that the concept of saving money might still be foreign to kids, but in reality, poor financial skills often result in delayed financial responsibilities. Therefore, being knowledgeable about how to manage money at the earliest possible age will be useful for any young person in the future.
According to Tramontana, saving money is an important financial habit that will prove to be invaluable in life. The best part about saving money is that it is completely harmless and devoid of consequences. Saving takes the stress away from spending and makes life a little easier. But then, saving money requires strong will power and discipline — skills that are both useful not only in the early feats of a child but throughout their whole life.
Saving money is a way of living, and it has nothing to do with any business idea, although it is a great advantage when one decides to take on that path. Personal disposable income that an American can save in a month for the first quarter of 2020 is only 9.6%, and 19% of American families have nothing saved to cover any emergency expenses because they live paycheck to paycheck.
Only about 1/3 of Americans (32%) can properly manage a budget for their household, so it isn’t too early to start teaching children how to properly control their finances. Without proper financial education, children can be very vulnerable not only in the marketplace but in every aspect of life. Children are greatly influenced, from an early age, by the social environment in which they live. In the academic journal article, Journal of Family and Consumer Sciences, Martin & Oliva said that children learn behaviors by modeling what they observe and process the available information. They also stated that helping children learn about money is a basic life skill that must be taught at home as early as possible. Schools often do not include personal finance in their curricula, and parents are sometimes unsure of age-appropriate techniques to teach children about money. They say that experts in the field indicate that teaching children about money not only increases their level of financial literacy but also enhances their knowledge about money-related values (e.g., charity) and common money transactions. Developing an early awareness of spending and saving concepts will likely translate into efficient money consumption by the child later on.
Tips on How to Teach Money Saving to Kids
Dr. Whitebread & Dr. Bingham of the University of Cambridge mentioned that in contemporary developmental psychology, children’s learning is seen as being limited only by their lack of experience and accumulated knowledge. New environments may pose challenges, and a young child’s lack of experience may make it difficult for them to see the relevance and priorities of a situation and to work out the best way to proceed. This confusion can be made clear with context and through the guidance of significant caretakers like their parents, caregivers, teachers, and older siblings.
Teaching kids to budget money helps in building their foundation in disciplining themselves. It is not unusual to find some kids saving money nowadays, and when asked what they are going to do with the money, most of them answer with wanting to buy their favorite toys. Teaching kids financial responsibility is preparing them for interacting with the outside world and the inevitable reality of managing their finances once they grow up.
Is there any best way to teach how to save money for a child? The following are saving money tips for kids that will help them start their own financial journey.
- Set missions. Children are as curious as they are intelligent. Showing any child a keypad, a touch screen phone, or anything that will pique their interest will trigger them to move towards it and get to know more about it. Children have a strong desire to learn new things every day and to get to know more about the world. This is a perfect time and opportunity to help them in setting goals and showing them how to achieve these goals. As early as now, one can let their child set goals that are realistic and attainable. The key is to set small achievable goals, so they can get started right away. They can easily realize these goals and get used to the feeling of accomplishing small objectives. Teach them to set aside a certain amount of money for something they want to have — like a snack, or a toy, and repeat it again and again until they reach their goal or their “missions.” This is a good start to teach children to budget and not spend everything that they have. This teaches not only discipline but also patience.
- Record the spending. Take a child’s creativity and interest in novel things and use these to help them develop their skills. As a simple way of monitoring, get the children a notebook and a pen where they can write down the things they used their money for. Teach them the importance of why they need to write down the items that they bought. Explain why their money decreased when they got an exchange for it. They must be aware of where their money is going. It will help them recognize their “expenses” and how much money they can “save” and how this “saved” money will add up within a period so they can get their goal (like a snack or a toy).
- Track progress and avoid impulsive spending. Teaching kids about budgets is to teach them how to appreciate and give value to the money given to them. Teach the children self-control at an early age. Whenever a child wants something that is currently unattainable, explain to them why they can’t have it. Remind them of the feeling when they finally get to their goal by making them remember just how good they are for achieving the small goals. Remind them just how close they are to their new goal by showing them the notebook they worked so hard for. Motivate your child and encourage them. Explain to them patiently why they should avoid things that will hinder their “mission.”
In the end, budgets for kids require the guardians to teach their child never to give up on their goals and to keep going. Your children are going to face many financial decisions throughout their life and knowing from an early age how they should manage their finances will guide them in the many choices and commitments that they are to face.
Vigorously implement the above-mentioned points to them as early as now. It prepares the child enough to have control over any difficulties they will encounter throughout their whole life. Any child must know that their efforts in learning their finances are not put into waste, and it will surely be worth the wait because soon he will be able to enjoy and harvest all of his hardships.
The Essence of Teaching Children to Save Money
According to Weyman, author of 5 Simple Tools to Save You Big Money Every Day, you don’t have to give up simple pleasures in life to save a buck every day. Money should not constrain us, but it must empower us. It does not have to be overwhelming; having enough will be fine. In teaching your children how to save money, you need not pressure them by demanding a certain amount of money that they must save every day. Instead, you must encourage them that saving, even a little amount, will do. Make your child realize that the financial decisions that a child makes early on in life will affect his or her ability to become a financially secure adult. If children are not taught the benefits of saving, using credit wisely, and other money management skills, their ability as adults to buy a home or to plan for retirement may be greatly hindered. Of course, if you feel as if you are not financially savvy enough to teach your children about budget management and other such techniques, we can help you out. Your financial literacy is our priority!