Teaching Kids How to Save Money

The dollar is reigning supreme, so why should your kid be left behind? Perfectly instilled spending and saving habits can take your kid a long way in their lives. Read along to know how to teach kids about money and saving.

Difference between Needs, Wants and Wishes

Equip kids with a better understanding of spending by explaining to them the difference between needs, wishes and wants. They need stationery to go to school, they wish for a gadget their friend recently got on her birthday and they want a laptop as soon as possible. The difference is that spending on wishes is capricious, on needs is imperative, and on wants is completely dispensable.

Setting Goals and Achieving Them

Making a savings goal chart is a great way to effectively teach your kids how to save money. Put up a calendar on the wall and ask them to draw the object that they wish to have next to it. They can write down their allowances on the gridded calendar so that they can see their progress every week. If they want another item during the course of saving for the initial object, they will have to pay for it with the money they were saving for the initial object. This teaches them about responsibility and taking ownership over their savings and spending.

Value of Saving as Opposed to Spending

Start adding an interest rate to your kids’ savings at home, like any regular account in a bank. Encourage them to save instead of spending, even for something they want really badly. By adding the interest rate, they can better understand the quantitative fruits of saving.

Real Time Savings Account

Creating  a bank account with the parents will motivate kids to save more, since they are being treated well as a customer of prestigious banks. Additionally, parents can deposit money into this co-owned account to prepare for your child’s future.

Independent Spending Decisions

Always allow your kid to make their own spending decisions. If they want to break their savings trajectory for a toy or electronic they really want, let them make that decision. Explain the pros and cons of the investment like a friend, but ultimately, let them decide whether they should spend their money or not.