How to Teach Kids about the Importance of Savings

The mistake many parent do is thinking their child is ‘too young’ to learn about money. Introducing money and the importance of saving at an early age will help them control their material impulses and channelize their wants better. You needn’t make them sit and explain to them the difference between a cent and a dollar. When your kid ask for a toy when you go on shopping, don’t immediately buy the toy for them or tell them a blunt no. Ask the kid if he really needs it and if so what he is going to do with the other toys. Explain to him the budget on which you have come out. You can tell him that you will indulge him once a month and set a date for it. Through this, the kid gets to know buying things is not easy.

Here are few ways to introduce the importance of money and savings to your kids:

Explain your budgeting:

Explain to them why you are saving money and how helpful it is going to be for the future. Tell them how you budget your earnings. For example, how much you keep for groceries, bills, medicines and finally savings. Kids are not going to understand facts and numbers. Explain the importance of savings to them like a story. Conjure up simple emergency scenarios for which money will be required.

Take them to banks:

Whenever you have bank work, take them with you. Show them withdrawal and pay slips. If possible, open a child account for them (a ten year old can perfectly start doing basic banking like depositing and withdrawing money). Give them an allowance every month which they can deposit in their account when they come with you. This not only teaches them saving, but also banking. You can give them pocket money and ask them to deposit a percentage of it in the bank.

Set goals:

If your kid wants something really badly, don’t immediately buy it for him. Tell him he has to earn the money to buy the object he wants by helping you with the household work. Give him small household jobs and pay him after he finishes a particular job. Ask him to save the money he gets to buy the toy or any other object he wants at the end of the month.

Get a piggy bank:

If your kid is a 3 or 4-year old, you can buy him a cute little piggy bank of his choice every year. Show him the money he saves every month. Tell your kid that he needs to save money to buy a toy or a candy. This will get him into the habit of saving. As your kid grows and if he has any money left in his piggy banks, you can deposit that money into his bank account when you open one.

We assume kids are very young to learn a lot of things including money and saving. Kids absorb more and notice a lot of things that we adults oversee. This is the reason kids are extremely inquisitive, they ask questions to genuinely know about something they don’t understand. When you explain savings to your kid, you will be surprised when you go out for shopping the next time. Your kid just might say, ‘this toy doesn’t fit our budget so I don’t want it’. Teach your kids the importance of savings at an early age. It will mould them as they grow.

Gabbie has been writing technology related contents such as blogging, social media, gadget reviews and tutorials and making money online for more than four years now. She is currently working as a writer for Massbeacon where you can get details on FiOS Availability offers and savings.