Learning and motivating children to make the right decisions about money will shape them in people who know how to save more no matter how much they earn and will teach them how to spend money that is “smartly spent”.
The easiest way to teach your child how to save is to show him your example.
Here are some simple ways that your child begins to value money like you.
Open your child a savings account
Go with your child to the bank and open a savings account. Explain why it is important to get money from the “bunny box” and put it in the bank. You need to understand how this amount will grow for the amount you pay, but also for the interest that the bank pays for savings.
Reward savings
Add money to every dollar your child puts in a piggy bank holder. When they are small, surely every time a child saves you can duplicate that amount, but as they are older, reduce that amount to 50 and 25% of the sum that your children set aside for savings.
Encourage your child to save for some goal
If a child wants some expensive toy, you can use it as a great way to explain to your child how the savings function works. Tell him you do not have enough money to buy a toy now, but you can buy that toy together in a couple of months if you save.
Make a savings plan and help the child to accomplish it. Encourage him to put money he gets from his relatives, for example, into a trolley and explain to him that he will reach the goal as fast as possible.
Make a wish list
Together with your child, create a wish list. Make a savings plan to fulfill these goals and start realizing them. This will help your child understand the flow of time and the fact that we are not always available. He will learn to achieve his goals over time. Every time you make a wish, reward him with a non-cash prize: a sticker, a toy, a trip. Make the child’s code a habit of feeling good when he/she achieves what he/she wants to achieve.
Allow child to earn money
During the summer break, when they do not have a lot of responsibilities at school, you can teach your child how to make money. This does not mean that you need to immediately hire a child with a friend and get rid of him with heavy eight-hour work. You can, for example, show your daughter how to make jewelry and how to sell it.
Include a child in the home budget planning
If you make a birthday party, include a child in making a financial plan. Teach him how you plan spending for friends and relatives to invite to a party and encourage your child to calculate with you how much money will be needed to pay for a party for friends whom he is planning to invite.
Make your child aware about income and expenses
You will say: My child has no income. Are you wrong? All the money you give, your relatives or friends is some kind of income your child is making. Not making money is not a reason to not teach him that money “does not grow on a tree”, but that he is the price of your work.
Include a child in the story of family finances in order to understand the difference between the compulsory costs, such as utility bills, and the costs that can be postponed, such as buying a new bike. The sooner children learn the difference between income and expenditure, they will begin to respect the value of the money they receive.
Save together with your child
Have your own “bunny bank”, your savings account and your goals. Save with children and with them. So he/she will not accept savings as something nonsense.
Teach children to spend smartly
Savings for savings are neither functional nor attractive. If you tell a child to save money, it will not mean anything to him. When learning a child’s savings, you need to teach him/her how to spend that money. Of course, spending money should come wisely.
Explain to him/her that he does not have to buy just what he/she thinks is nice at that moment, but to spend money on something that is useful. To invest in oneself.
Let them make a mistake
When they get the money and want to spend it, let them make a mistake. It will be best to learn from mistakes if they have done the right thing with the money they had.
You will not have to “bother” them with stories about how spending all the money is not good at all, because they will not have to make money anymore.
Let them spend money on some stupidity and it will make them understand that they could be smarter to use it. Nevertheless, be prepared to give them a guide to managing money whenever assistance is needed.
Why is it so important to teach your child how to save money? The reason is not to make them have their own money and not give them anything. It will actually benefit them in more ways than you think: they will aspire to be well-organized, intelligent people with decent financial goals in life.