The earlier you start to teach your child how to save, the easier it will be for them to learn. They’ll also be able to develop healthy financial habits early on that will help them succeed as an adult. Kids who learn about saving and spending when they’re young often have a much easier time managing their money as adults.
Setting your child up for financial success can be fun and will encourage them to develop healthy habits. Here are five ways to teach your kids money lessons that they’ll enjoy.
Encourage a variety of goals
Kids are very visual so teach budgeting with visual aids they can relate to. Help them start three piggy banks or jars, and label them “saving,” “spending” and “charity.” Whenever they get money, like an allowance or birthday gift, teach them to divvy it up between the three banks, and spend or save accordingly. After a while, they’ll be able to visually see the money in their “saving” bank grow, which will encourage them to keep adding to it.
Teach short-term vs long-term goals
Teach your kids to plan for the future by helping them set a few goals and making them understand that they don’t have to spend all their money at once. Explain to them that if they have $10, they could choose to spend it on a toy now or save part of it for something they may want in the future that’s more expensive, like a video game. This is a great way to help them understand the difference between short and long-term savings goals.
Open a savings account
After your child has learned to save a little up in their piggy bank, they’ll be ready for the next step; their own savings account. Most banks offer competitive interest rates and fee-free savings accounts for customers 18 and under. When your child opens a savings account, they’ll be able to see their money earn interest and grow over time. Show them their account statement and balance each month so they can see the interest they earn by keeping their money in the bank.
Match their savings
Help your child set a savings goal that they can manage. When they reach it, say saving $100 for example, reward them for their efforts by matching some or all of their savings. Knowing that they’ll earn more money just for sticking to their savings will encourage them to reach their goal.
Make saving fun
Kids love to play games and many games can also be educational. Classic board games like Monopoly or The Game of Life help to teach basic financial principles that they can understand. You can also visit Kids.gov to find age-appropriate games and videos to teach money habits that they’ll enjoy.
Teaching kids how to save doesn’t have to be hard; in fact, it can be very enjoyable for them. By showing your child different ways they can manage their money and save for the future, you can help prepare them for financial success as an adult.