How to Teach Kids to become Smart Savers

Teaching kids how to save is a very challenging task. Kids doesn’t know the value of money, investments, and savings and all they care about is having fun thus when it comes to finances, all they do is just spend. However, as hard as it may seem, teaching kids how to save is very doable as long as it is being done in the right way (creatively and interestingly). Once your kids start to understand and develop the habit of saving, you can relax a little bit and be assured that they’ll be in a lot better position in life later on. So what are the things that you should consider doing in order to call your kids attention towards savings? Here are some tips.

1.) Piggy bank. Most parents use piggy banks as a way to introduce savings to their kids. Piggy banks is one of the most effective ways of teaching kids how to save because the concept is very simple and they can see their money grow. Encourage your kids to put their money in their piggy banks so that they can buy toys, clothes, or whatever they want later on. Piggy banks make kids see the importance of setting aside an amount for future needs thus sooner or later, the habit of setting aside a portion of their money would become easy.

2.) Open a savings account. Banks are by far the most common and familiar institutions and kids know what banks are for, they’re places where money is being placed in order to grow. Never mind discussing interest and inflation rates, mutual funds, stocks, and other investments to your kid. For sure they can never understand you. Opening a savings account will make them familiar as to where to put their money later on. The point of opening a savings account is to: [1] Introduce the concept of interest rates in letting money grow, and [2] introduce financial institutions as to where to put their money. Only explain what they can take and rest assured they can easily comprehend what banks are for. You can talk to them about mutual funds and other investments once they grow older and when you think they are old enough to comprehend what you’re saying.

3.) Encourage them to set goals. If they want a new toy, a new dress, or anything they want, encourage and develop them to be goal-oriented. If they have goals, they can save easier and it will make it a little harder for them to spend their money easily. You can be creative in setting goals such as writing it on the wall, randomly pay them for something good that they have done, or even letting them realize the value of hard work by paying them after doing something. Goals are very important in life and there is no better way and time to start setting and achieving goals than during the early years.

4.) Talk about finances with the kids. The character that kids develop when they grow up is strongly being affected by the environment that they have in their home. If a kid grows up in a financially educated and disciplined family, rest assured such kid is going to manage his finances well when he grows up. Always emphasize the importance of saving in front of them.

5.) Show them that you and your spouse are saving too. Action speaks louder than words and in most cases, kids will never heed your advice not unless if they see you yourself do what you said. If you want them to develop the habit of saving, you must save too. One creative way is for you and your spouse to have piggy banks as well just to show your kids that you’re saving too. If they see you, they’ll be more inspired to save.

6.) Help them spend wisely. Kids normally doesn’t know what’s the best for them and what’s not. For them, as long as they enjoy it, its good. Saving and spending are habits and if your kids develop good saving and spending habits, they’ll be in a much secured position later on in their lives. Regularly talk to them and justify your spending decisions towards them. Kids can comprehend so well and once your regularly do it, there will come a time where they themselves can distinguish what is a good expense and what is a bad one.

Teaching your kids how to save doesn’t necessarily mean that they should become so thrifty. Because kids will normally spend, just encourage him to save even just a portion even if he spends too much. A small regular savings can go a long way if done religiously. The best time to start saving is during the very early years thus is you teach your kids well about finances, they will become financially secured in no time.