Saving money is a crucial part of life. It can protect you from anything happening in the future and can be your partner in old age. Every family should learn to save money, even if it means saving a dollar. From a young age, we are taught how to save money, but sometimes we fail and get stuck in the tangles of a paycheck with no money set aside. Now that you are a parent or caregiver, you wouldn’t want your kids to spend all their allowance and have nothing saved. It is your job to teach your kid how to save.
But how are you supposed to achieve that? Here are four strategies for starting your children out on a path toward financial literacy.
Teaching Children to Save Money in Four Steps
1) Discuss Money with Your Children
You can not walk up to your children and tell them to save money. Children need a clear understanding of things they are supposed to do and things they are not to do. 41% of parents indicated they don’t like to talk to their kids about money in a 2021 T. Rowe Price study.
According to Caroline Tanis, a New Jersey-based financial adviser, “Discussing money and what it means to your child before they do anything with their money is an essential first step.” She advises parents to get information from their kids about how they plan to utilize their allowance. How much of their income would they want to spend vs. save? They’re saving money for what, exactly? Tanis also says that teaching children about these topics may give them confidence in handling money in the future.
2) Open a Reliable Savings Account
You need to have a safe and secure place in order to save money. The safest location for your older children to put their allowance is in a savings account. Children who see their savings grow over time may be inspired to save more. When starting, look for a children’s savings account that offers a respectable interest rate, no required minimum deposit, and little or no monthly fees. Kelly Klingaman claims that if kids receive interest on their accounts, they will eventually start to understand compound interest at a young age.
For children who grow up and become active-duty military service members or personnel, parents may emphasize the long-term advantages of taking out a VA home loan mortgage. This can be a great way to save money because the VA loan offers low-interest rates and no down payment when buying a home.
3) Create a Goal-setting Plan
After opening a savings account for each of your children, it is essential to help them select a particular saving goal in order to urge them to consider saving money for the future. Most parents believe that teaching their kids goal-setting will teach them the value of delayed gratification. Natalie Runyon, a mother, says, “Goal-setting is crucial because it teaches my children the value of delayed gratification in addition to the eventual joy of success.”
Teaching your kids how to create goals and work toward them after resisting the urge to buy one thing they really want is one method to help them understand the worth of the things they buy. By instilling this habit in them early on, you may help them from any future spending temptations. Your savings account smartphone app allows parents and kids to keep track of the progress of their savings. You may track your growth using the savings target calculator.
4) Teach Your Kids How to Spend Money
If you want your kids to learn how to save money, you must educate them on how to spend cash. Try utilizing a spending account or app with a mobile emphasis that offers debit cards, budgeting tools, and, most significantly, the ability for parental spending control. “These elements provide youngsters the freedom of money coupled with creating boundaries to help them regulate their spending,” claims Klingaman. That will make it simpler for kids to save since it shows them they have control over their savings.
Teaching them early about financial education will give them an idea of how to save money at a young age. That will develop into a habit that will follow them for a lifetime.