7 Tips to Teach your Kids to Save
We all know that it’s important to teach your children about money; the value of money, their spending power and begin good saving habits. It is recommended that you talk to them about money gradually, and in a manner adapted to their age, then you can expand to more complex economics. Not only is it important for them to have a good financial understanding, but it is important for their future working life.
Here we have compiled a few ideas to begin their financial education.
1. Give Them Pocket Money
Get your little ones their own piggybank to start putting aside money and give them a regular allowance or pocket money. Let them see how the money grows over time (especially if they get birthday money or collect a few gold coins from the Tooth Fairy).
2. Teach Them about Spending Power
Children need to understand the reach of their money; if they choose to spend on one item, they may not have enough for another. Teach them the difference between necessary and superfluous expenses, or what they prioritise first. For example, if they spend most of their money on the talking Minion toy, they may not have enough left to buy a Caramello Koala. Perhaps they can buy a cheaper toy and still get the chocolate, or maybe settle for a Chupa Chup.
3. Where Does Money Come From?
Have your children think about where money comes from – many of us remember our parents saying “money doesn’t grow on trees”. At this stage they may think that money is handed to them from their parents, so explain to them about the work parents do to bring home the wages.
Bonus: having the children think about what they might like to do for work can be used to motivate them to apply themselves at school. For example, they love animals and like the idea of being a veterinarian, you can explain to them that the vet uses their maths skills to work out how much medicine to give to the dog.
4. The Importance of Saving
Talk to them about the importance of saving; you can discuss the benefits of saving and talk to them about the importance of having a contingency stash. If there’s a particular toy they want, have them put aside their pocket money every week and work out how long it’ll take before they have enough. Or if there’s no burning need for a particular toy, have them save up so one rainy day you can take them out shopping.
5. Money in Bills, Plastic and Currencies
Have them learn about different forms of money – have them look closely at the Australian bills and coins and have games so they can learn how to make up different amounts from combinations of coins and notes. Teach them about different forms of money like foreign currencies, or even your credit card; it might be a piece of plastic, but it is still money.
6. The Importance of Identifying Spending
Introduce them to budgeting by having them identify spending – write down a short list of your household monthly expenses and look at some of the expenses that are made without them noticing. Explain the difference between value and cost price, and also the difference between need and want.
7. Teach Them to Earn Extra Money
The new Frozen doll out of reach for another few months? Or they want that fancy Star Wars Lego set? Have them augment their savings by finding ways to earn extra money. Not only will this help them have a better understanding of money, but it will also help them learn skills that will help them in the workforce.
Why not give them a gold coin for a series of house tasks that they usually would not be responsible for? Or want to teach them to be a little more enterprising? Have them ask the neighbours whether they would like their grass mown, their leaves raked or their car washed. Perhaps they can make simple cakes or chocolate slice and have a bake sale? Or do you have a lemon tree? Have them make lemonade and sell it to your neighbours.
Once they have earned enough to buy the item they’re saving for, take them to the store to buy it and they will feel even more satisfied after putting in the extra work to save for it.
We hope these tips will help you encourage your children to be more savvy with money.
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