When it comes to children, most parents want to see their kids grow up to be as successful or more than they have been able to become. It is important to make sure you are teaching your child from a young age, how important it is to be responsible with money, by budgeting and saving. If a child knows they can spend their money without worrying about saving, they will not learn how to handle money appropriately and may end up in a difficult financial situation as an adult.
Set An Example For You Children:
You are your child’s role model. If they see you setting a budget and sticking too it, they will want to do the same. You may not want to show your child your actual finances, but you can set a “family” budget, where you all plan together and save for something special for the family. It can be a special activity or dinner out. You could even plan a family trip and show your child how you set your budget and put money away each week to save for the goal. It is a good idea to make a chart that you fill out each week to show how close you are to the goal you are setting. This will make it easier for your children to understand the small steps that lead up to the end goal.
Family Savings Jar:
Keeping a family savings jar, shows your children how to save a set amount of money each day or each week. They can help you set a goal for how much money should go into the jar for each interval. As you build the savings in the jar have your children help keep count of how much money is there. When it fills up and you reach the goal, take them to the bank and have them make a deposit in the family savings account. This will model a clearly mapped way to set goals for savings and how to keep their money organized and safe. If you have multiple children, you can either have them share the jar and bank account, or do a jar for each child along with their own savings account to put the money in once they have reached the savings goal.
Give Commissions, Not Allowances:
Giving your children an allowance for contributing to the household chores is a great way to teach them that they have to work for the things they want. A great way to teach children about earning their money is to give them “commissions” for completing their chores rather than just referring to their payment as an allowance. This will teach them about what may happen once they get a job when they are older. Relating it to the job world is an important way to teach children about how payment works in many positions in the workplace.
Discuss Cost With Your Children:
Make sure to talk to your children about how much things cost, as well as how to save up for things that they want, they can’t currently pay for. If there is a specific toy or activity they want, that they have to save up to get, you can help them set up a budget with their allowance so they can get it over time. Having a goal to save for will help them understand the cost of things. It will also teach them to respect hard work and the power of savings. You can also talk to your children about the cost of different items, by comparing one to another. How much does a bag of chips cost vs an iPad. Or how much a trip to the beach costs vs a trip to an amusement park. Using items and activities they are interested in will help with their interest in the topic and help them focus on the conversations. This will also help your children set their goals for saving, because they will better understand the cost of what they are saving for.
Teaching your child how to be responsible with their money at a young age is very important. It also ties into creating a budget and teaching your children to save their allowances. Teaching your children to respect the money they earn will help them better understand how to be responsible with their finances and set them up for financial success in the future.
Tools to teach budgeting:
Open A Bank Account For Them/With Them:
Have your child go with you to open a bank account for themselves. This way they know where their money should go as they earn and save each time they get their allowance. It gives them a sense of ownership for their money. Taking them to the bank with you makes them a part of the process. This is important because it makes it more real for them. They will also have fun going to deposit their own money and talking about their savings goals with the bankers.
Use Family Budgeting Apps for Allowance and Chores:
Using a budgeting app for your family can be very helpful. It is a good way to integrate technology into the budgeting thought process for kids. A lot of banking these days is done online, so this will build a good base for their future digital banking abilities. Many of these apps are capable of tracking chores individually, so parents can separate the chores and pay their children for each individual chore. Children can also choose an avatar with many of these apps, which make the whole process more fun!