Most children these days get a financial allowance. While this allowance is acceptable, have you ever thought about teaching your child about saving money? Some kids are financially smart, they make it a point to save a percentage of their pocket money, but most of them do not save a penny.
Don’t you feel you need to teach your child about saving money?
Don’t you want to see your child make the best financial decisions later in life?
Here are some ways through which you can get your child to save money:
1. Discuss money matters with your child around
Please note that it is not necessary to discuss financial matters in an isolated room. There is nothing to hide, discuss your financial situation openly, it doesn’t matter even if your child is around. In fact, it is even better if your child gets to hear those money conversations. It would be wise if you discuss with your child about money from his early years. Even though he might not understand the whole concept, he will certainly get to know with time.
2. Be a role model:
Your child follows you. He keenly observes your behavior, and it is no exception when it comes to money matters. He watches you when you choose a cheaper pair of shoes or discard a branded or fancy product because of the price. However when he comes up with a question, answer to him patiently. Explain why you chose the low priced product. Make sure you teach your child not to waste money. The sooner you make your child aware of this, the better. Your child will certainly remember all this for life.
3. Learn to say ‘no’ to your child’s demands
Kids these days demand things because they know, they will get it, without bothering about the price and most parents are happy to buy without a second thought. If you are doing the same, what precedent are you setting? Do you think your child will be able to handle money matters efficiently when he becomes an adult?
It is agreed that as a parent, you would love to see your child happy. You would do anything in this world to satisfy your kid. However it is not just making your child happy, you have more serious responsibilities as well. It is your duty to make your child aware of the value of money.
4. Get your kid a piggy bank
If your child is too young, lecturing him about money will not help. It will seem like rocket science to him. Try to cultivate the habit of saving money in him in a funny way. Get him a piggy bank and ask him to fill it up so that he becomes richer by the day and that he could buy all those things he loved.
5. Talk about money often
Children are playful, so they tend to forget money lessons easily. You need to talk to your child about money time and again and it is your sole responsibility, because your child does not get to learn these lessons at school. Explain it to him that saving is important to build wealth and to deal with difficult situations in life.
6. Praise your child when he saves money
Make your child happy and proud by praising him every time he saves a penny. Children love being praised, so make the most of it. You can even reward him by allowing him an extra hour of play, this urges him to save even more.
7. Follow 1-1-1 method to make them financially smart
1-1-1 method is very popular with kids and parents. You can ask your child to save a part of his allowance, spend another part on what he wants and the remaining one part on charity. This develops him as a ‘whole’ individual. While he can buy what interests him, you are also sending a clear message that saving is equally important, not to forget some charity!
8. Motivate your child by paying him some interest
You can pay some interest, on par with market rates, on the money your child has saved. This is a big motivation and you can see that your child will try to save even more.
9. Once your child is adolescent, open a custodial account in the bank
If you feel your child is mature enough to manage his saving and spending, open a custodial account in his name. Doing so will help your child learn financial management early in life.
10. Teach your child about debt, accounting and taxes once he is into high school
If your child is into high school, then now is the time to teach him about the importance of staying way from debts that charge high interest, besides accounting and taxes. Take your child along when you are going to meet your accountant or make him sit next to you if you are filing taxes online.
11. Involve your grown-up child when making important money decisions
If you are buying a house or a new car, let your grown-up child have a word. Getting him involved itself makes him eager to learn financial concepts. He will get to know about interests, loans and down-payments which will help him make financially smart decisions later in life.
12. Teach your teenager child budgeting and encourage him to apply for scholarships and student loans
Higher education nowadays costs a fortune. Teach your child to plan(budget) appropriately for funding his post-graduation. Let him know the factors to be considered when applying for student loans and scholarships.
Financially smart lessons are not taught at school. You as a parent need to make sure your child learns to manage his finances. Remember financial lessons cannot be taught overnight. It is a continuous process and needs to be taught from childhood. It is your duty to make your child aware of the importance of saving and empower him to face life more confidently. Teach your child to save money from his early days and take pride in his responsible financial decisions later!