Today and every day, help your kids make good choices
Teach Children to Save Day is April 28, but you can celebrate every day of the year! Here are a few tips to help you teach kids the basic principles of saving money.
Set a good example
Your kids learn many important life skills by watching you, and money management is no exception. If you want them to learn that saving money is important, be sure you’re modeling that through your behavior as well as your words. Whatever you’re saving for — emergencies, retirement, college, a family vacation, or an upgrade to your home — let your kids know how those priorities affect your decisions about spending in other areas.
Many employers offer savings incentives to staff by matching their contributions to company-sponsored retirement plans. You can apply the same principle to help motivate your kids to save. Whether you match their savings on a percentage basis, provide bonus funding at preset intervals as they work toward their goals, or simply celebrate major milestones with a special treat, reinforcing their efforts with rewards or recognition can go a long way toward getting kids on board with saving.
Let them make mistakes
It can be tough to stand back and let kids make mistakes, especially costly ones, but sometimes it’s an important part of helping them learn. Do they want to splurge on a pricey toy that you know won’t hold their interest for long? Are impulsive purchases slowing their progress toward a bigger goal? Within reason, consider resisting the urge to interfere on your children’s behalf when they’re learning to manage their own money. This will give them the chance to see consequences of their decisions and learn from their mistakes.
The realities of interest — both positive and negative — can be hard to grasp until you’ve seen them firsthand. Unfortunately, for many young people, this lesson doesn’t hit home until they receive their first credit card and learn it the hard way by living beyond their means, which can affect their finances for years to come. One way to help get the point across earlier and with less damage is to play the role of the creditor yourself. If your kid wants to borrow money for a purchase instead of saving up for it in advance, establish a credit limit, an interest rate, and a repayment schedule — and then stick with it. This will help them learn the important lesson that buying on credit typically costs more in the long run.
Games can be a great way to help kids learn about savings from a young age, without making it feel like a chore. Monopoly is one great option, but don’t limit yourself to games that are explicitly about money. There are lots of resource management games that can gently introduce the concepts of spending and saving within a wide variety of themes your kids may be more naturally drawn to, such as heroic adventures, alien worlds, or cute and cuddly critters.
The information provided here is general in nature and may not apply to your specific situation.