10 tips on how to teach your children to save money
Every year, one day in April is designated as “Teach Children to Save Day.” This day, April 22, is all about helping kids become smart about money from an early age. But if you have kids in your life, every day should be devoted to that. In fact, the month of April is dedicated to financial literacy, encouraging people of all ages to grow their knowledge and practices of good money management skills.
Saving money is a habit that can take time to build. Some adults have yet to master it. As of November 2020, 63% of Americans were living paycheck to paycheck, with no savings set aside to cover emergency expenses. Granted, this has been a particularly difficult year for many people to save. However, it helps to go over the lessons and help your kids learn the skill in good times and bad. With this in mind, let’s consider several actions you can take to get your kids — and perhaps yourself — on a saving trend.
1. Discuss wants vs. needs. A first step in teaching kids the value of saving is to help them distinguish between wants and needs. Needs include the basics, such as food, shelter, basic clothing, health care and education. Wants are all the extras like snack foods, movie rentals, designer sneakers, a bicycle or the latest smartphone. Use your own budget as an example to illustrate how wants must take a back seat to needs in terms of spending.
2. Let them earn their own money. Some parents pay their children an allowance weekly or monthly, often linked to household chores. Allowing children to earn and save money provides them with the opportunity to learn how to use it. When an allowance is offered in exchange for chores, children also learn the value of their hard work.
3. Set savings goals. To a kid, being told to save without explaining why may seem pointless. Helping children define a savings goal can be a better way to get them motivated. Help them break down their goals into manageable steps. Help them plan how many dollars per week to save and how many weeks to reach their goal.
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