Save early for a better later.
The whole world revolves around money. unfortunate, but all too often the case. When you’re young, you quickly spend money without giving a second thought to the possibility of adverse effects. You’re certainly not thinking of how to avoid debt.
It’s essential that children are educated about the value of money, so they understand it’s worth in the real world. Saving money is one of the most important things to learn if the goal is to establish a financial foundation.
Many of us learned to save money through experience. It was not really taught at school. But, by teaching and developing habits to avoid debt from an early age, we can empower the next generation. However, it is not as easy as it sounds though to inculcate the idea of money management. Listed below are a few ways that will help you teach the tots about managing money from an early age.
It all starts with a piggy bank
The piggy bank is one of the most common forms of “savings” for a youngster. For those that aren’t familiar, a piggy bank is a small plastic bank (usually shaped like a cute pig), for coins. As simple as that, but a couple coins every week fills his belly pretty quickly.
For young kids, it can be the simplest way to start saving money early. They can set goals, and then use the piggy bank to save towards those goals. The main lesson of the piggy bank is to teach saving for the future, and how money grows as you save it.
Open up a bank account
The next step is to open a bank account. Once the piggy bank has run its course, take your child to the bank to open up a savings account for them. A first savings account is a big deal for a kid. The feeling of responsibility, and your very own place to save all of that money. Of course, you’ll need to make some money first 🙂
With a new savings account comes many lessons. Interest if applicable and how it can increase wealth simply by saving money. How to deposit money, and review financial statements. You’ll find many other lessons in this process, maybe more than you hoped for!
Avoid debt using savings jars
Kids always long for the latest and greatest toy or a new action figure. The good news is, they can have it, they just need to make a few smart financial decisions.
Give them a jar for their desired toys and offer them small pocket change each week to bolster the savings.
For example, if you give your child five dollars a week, give it to them in one dollar bills, once a day. They can save all their cash for one purchase of one toy if they wish, or they can contribute to different “jars” for more than one saving goals. Some will learn the hard way, and spend that dollar every day. The lesson comes when a youngster learns discipline to put that dollar in the jar every day.
Each day may be tough as you learn discipline. But, the reward of a new toy at the end of the week cements the lesson of saving with a purpose. Not only does this result in a new toy, it teaches children to avoid debt by saving for their wants.
Creating a timeline
As a kid, it can be hard to grasp the concepts of money and time. In order to make the message clear, money education should be repetitive and ongoing. One way to keep money lessons ongoing is to create a timeline so that your child can visualize their set goals.
For example, if you give them five dollars a week and they want to save up fifty dollars. If they saved one hundred percent out of their pocket money, they’d reach their goal in ten weeks.
Every time an amount is saved, ask them to keep track of how much was saved. Let them know that they will get small perks at each checkpoint. Small rewards can encourage kids to retain their interest and keep going. Visuals are also helpful in explaining their goals for savings and about how their money is growing.
Teach your kids about why and how you are saving for their college education. Teaching little ones about saving money may seem like one of the toughest tasks. But using these tips, you can help your child understand the concept of saving money in a play-way method. It’s actually an investment of knowledge which truly pays the best interest.