Saving money is a crucial element of being an adult. Yet, most of us don’t know the first thing about how to save our hard-earned money well. Our cheques are direct deposited, bills are electronically received and paid, and most purchases are made with a tap of a plastic card. When do we ever really see our money anymore? The automation of everything these days has taken away the physicality of spending. We no longer feel the purchases we make the way our parents did when they could only spend what cash they had on hand.
So, how do we teach our children about money and the importance of saving? I asked myself the same question one day after my daughter threw a fit in the checkout aisle at the grocery store because I wouldn’t buy her Bubbalicious. When I told her I didn’t bring money for her beloved bubble gum, she yelled “just use your card!” And that’s when it hit me that she has no idea how mommy’s magical card really works. In her eyes, mommy’s shiny card is loaded with infinite funds because that’s all she sees.
If you’re in the same boat as me, ballin’ with a faux infinitely-loaded-magical-money-card, and want to teach your children about how money works and how to save, check out these 5 tips!
1. Start Young
Miranda at Money Crashers started teaching her toddler son how to save long before she taught him about money. Miranda had a coupon-based reward system for her son’s TV use – he would have to earn coupons that could be exchanged for TV time. For children, the learning concept of earning, saving (or accumulating) and spending can go beyond money.
2. Use different envelopes/ jars/ containers
Children are visual learners and being able to watch their savings grow will help with understanding value. While many children will have a cute piggy bank at some point, having more than one place to save money – such as in jars, or envelopes – will allow children to experience and understand how to save for different things including:
- Long term goals (such as an expensive trip)
- Short term goals (such as a toy they have their eye on at the store)
- Every day spending
3. Set a Goal
Having a goal to work toward will keep children focused on why they’re putting money away. It will also teach children that different items and experiences have different values. While your little one might have their heart set on a new bike this summer, the $20 they received from their birthday simply won’t cut it. Saving for a bigger purchase will take longer to achieve and this is an important lesson to learn.
4. Reward Your Child
There is nothing wrong with rewarding your child when they have saved X amount of dollars. Or, even when they wisely decided against buying something with their money because they chose to keep growing their savings. There is nothing wrong with matching X amount of dollars that your child saves. As adults, we receive “rewards” from our bank in terms of interest. Decide what is best for your family in terms of how you will reward your child’s savings.
5. Set an Example
Money isn’t always an easy thing to talk about. But it is necessary. As a parent, one of the best practices you can teach your child about saving money comes from the example you set. Keep your own jar as a visual reminder to your children that you are actively saving too.
Another way to set an example is while grocery shopping. Talk to your children about discerning between different products, brands and price points. Explain to your children why you are opting to purchase one brand/ product over another – whether it is because the cost of A is cheaper than the cost of B, or because the value of A is greater than the value of B. Allowing children to experience your helpful money-saving-tips will go a long way as your kids grow and begin to make spending decisions on their own.
What are your tips and tricks to teaching your children to save? Comment below!