How to teach your child to save moneyDate posted: 5/16/17 08:00:00 AM
Any parent can easily recognize the look in their child's eye when they want a new bike, game or toy. However, before you decide to run to the store and buy something for them, consider using this situation as an opportunity to teach your child about earning and saving money.
Talk about saving
When introducing the topic of saving money to your child, the first step is to explain its benefits. Discuss the different ways money can be earned, and help them understand why saving it today, can have benefits tomorrow. Encourage your children to ask questions about the different ways people are paid and why it's important to save up for the things they may want or need in the future.
Turn it into a game
When you make saving money fun, your child will likely be more enthusiastic about tucking away a percentage of his or her earnings. Consider creating a savings chart together and filling it in as your child reaches a savings goal, or start playing money-focused games, like Monopoly, suggested Money Crashers. When you emphasize the value of saving money when your child is young, his or her perception of the importance of saving it will likely stick throughout life.
You don't have to pay your child an allowance to introduce the idea of saving. Consider giving your young one coupons to spend on watching movies or playing games on a tablet, gaming console or smartphone. Give each coupon a value of time, and encourage your child to save more coupons to redeem for longer, extended periods of time doing what they enjoy.
Reward their behavior
When your child wants to save up for a more expensive item, like a gaming console or bicycle, consider rewarding him or her with a treat or by matching what they save. Matching can be a great technique to use when you want your child to earn their purchase by saving up for it. By matching their contributions, you are encouraging them to save a little more each time they earn money, and it also mimics some 401(k) policies they may encounter later in their lives. While positive reinforcement is a great technique, ensure you don't make a habit of this as they should also practice saving money simply for the sake of having extra cash on hand for emergencies.
Identify a piggy bank
It's important to establish a secure place for your child to store and save his or her earnings. You can use a piggy bank, a mason jar, envelopes or even an account at your bank.
Adjust to their age
Teaching your children how to save can vary a great deal depending on their personalities as well as their ages. Parents Magazine noted that younger kids might develop a better understanding of money management by simply playing "store" while investment lessons are more suitable for an older teen.
Practice what you preach
One of the best ways to teach your child a savings lesson is to lead by example. Tuck away a little money yourself, and talk about how you plan to save for certain things, like a family vacation in the fall. If you involve them in your savings process, they will be more likely to develop healthy saving habits in the future.
Saving money is an integral part of financial literacy and should be part of any monetary discussion you have with your child. Using these tips, you can introduce the importance of saving what you earn to your child and help them develop a lifetime of healthy financial habits.
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