There are many aspects to financial learning and literacy, but a pinnacle objective is learning how to save money. Being able to save for your future is critical in supporting your ultimate financial well-being, security, and long-term happiness. It’s also personally rewarding, can build self-confidence, and enhance self-esteem.
It’s important to discuss the value of saving with your kids, but lectures aren’t the best method of teaching them successful saving habits. It’s far more effective to help your kids learn through hands-on experience. Here are eight tips to help your kids become savings-savvy.
When Should You Start Teaching Your Kids About Saving? When They’re Young
The sooner you begin to teach your kids how to save, the more time they have to develop healthy saving habits. We recommend introducing the concept of saving as early as age 6. However, it’s never too late to start teaching your kids how to save, even if they’re older.
Start Small and Expand
The first saving goal your kids’ encounter shouldn’t be one as colossal or abstract as saving for college! You’re better off starting with small, short-term goals and ramping up to larger, longer-term objectives.
- When kids are young, they can save for trinkets, toys, and holiday gifts.
- By the time they reach middle school, you can encourage larger objectives such as extracurricular activities, birthday gifts, and vacation splurges.
- By the time your kids are teens, it’s time to focus on longer-term aspirations such as saving for a car, special events like a study trip abroad, and certainly college.
Give Them an Allowance and Encourage Earnings
In order to save, your kids will need resources. We support giving your kids an allowance, as well as encouraging them to work small or part-time jobs as they mature.
Balance Spending and Saving
Realistically, the biggest challenge to saving is balancing current needs and expenses relative to longer-term goals. Requiring your kids to manage a portion of their personal expenses, in conjunction with setting aside savings, is one of the best lessons they can learn.
Create a Matching Program
If you have the means and support their chosen goal, matching your child’s saving contributions provides additional motivation and incentive. It also illustrates the longer-term importance of securing employer retirement plan matching contributions when your kids are working adults.
Establish a Bank Account
Collecting money in a jar or piggy bank works well when kids are young, but ultimately your kids will need a bank account in pursuit of longer-term saving objectives. We recommend setting up a bank account for your child between the ages of 10 to 12. When choosing a bank, look for one that’s friendly towards kids with regard to fee structures, educational materials, and online viewing capabilities.
Let Them Learn from Their Mistakes
Like any other aspect of life, granting your kids some autonomy over their finances will inevitably result in mistakes – and opportunities to learn from those mistakes. When it comes to money, it’s better for your kids to make mistakes when they’re young and the financial stakes are low. If your kids spend all of their money, let them experience the consequences. You could also consider extending them a small loan, but always with the requirement that they repay it.
Share How You Save
Ultimately, you’re the biggest influence on your child’s financial education and money habits. Be sure you’re setting strong examples and try to talk openly about how you achieve your own saving goals.
Following these key tips will give your kids the real life exposure they crave, and the financial experience they need. Always remember that it takes time to learn how to save, as a natural human tendency is to spend and enjoy today rather than think about tomorrow. Support your kids when they succeed, help them learn from their mistakes in supportive ways, and always encourage further learning.
Please contact us to learn more about how we can help you and your family achieve your financial objectives.