Of all the habits you might try to instill in your children, saving money may be one of the most important. It’s something that even full-grown adults can struggle with if they never learned the habit, and it can have significant consequences.
While talking about financial responsibility may be a good place to start, learning by doing is probably the best way for kids to really learn how to save money. Using a piggy bank or opening a savings account for your child provides them with a hands-on learn that’ll hopefully stick with them for the rest of their lives.
What’s the Right Age?
A lot of financial institutions have special account options made just for kids that make it easy for them to understand how to use their account. These accounts also give joint ownership to the parents, so that they can manage it until the child is ready to take on more responsibility.
You do, of course, want your child to understand the lessons you’re trying to teach them and to hopefully have some level of interest in it. Around six years is usually a reasonable time to start. A bit earlier may work if you’re just using a piggy bank.
Start With the Basics
When talking to your kids about saving money, start out with the basics. Tell them about how people make money and what banks do. Tell them about savings accounts and the potential benefits in kid-friendly terms.
Explain How Much to Save
One of the most important bits of information for a kid to remember about money matters is how to say. Experts usually putting aside 10% to 20% of income, so explain to your child that if they get a 10 dollar allowance they should put one or two dollars into their savings.
Give Them Something to Look Forward to
You should also highlight to your kids the potential benefits of saving money. Allow them to make a savings goal, such as saving up for a new bike or other item they want. Some financial institutions have tools that let kids easily track their progress toward their goal in a fun format.
If your kids are a bit older, you could also tell them about earning interest. Older kids might also like to learn about some of the other details, such as your credit options after you’ve established some savings and can start building credit.
Make It Fun
Finances aren’t always the most exciting topic, especially for young kids. So, try to make it fun. Use tools that financial institutions have available for teaching kids about finance. Let them save up for something they’ve been wanting.
Physically taking them to the bank to make their first deposit can become an exciting event. Lots of institutions will hand out lollipops or some other reward, which makes the experience more fun. If your kids are a bit older, you could also show them how to use online banking tools.
Learning about saving money is an important life skill, and you can never be too young to start learning about it. Make sure you really drive home how important saving money is to someone’s future well-being and do your best to make it a fun, rewarding experience. Learning about saving by actually doing it can be one of the best ways to make the savings habit stick.