Saving money isn’t easy. Adults already know this and many of us wish we had better financial skills. That’s why teaching your kids about savings is so important. While we don’t want our kids to be worrying about money, encouraging them to save money and understand how savings work from an early age will make them more money smart in the long run.
Teaching kids about savings doesn’t mean you need to educate them about high yield savings accounts or pension plans. Instead, you can put some simple things in place to encourage them to save money now and in the future.
Give them an allowance
An allowance is a great way to encourage your kids to be money smart and to learn how to manage their money. Rather than always buying big-ticket items for your kids, increase their allowance and let them buy those things themselves by saving their money. You could even offer to split the cost of an expensive item, like a video game or an electronic device, so long as they save up their half using their allowance.
You could also give your kids an additional allowance for certain chores, like washing the car or mowing the lawn. While it’s important to teach kids that household jobs should be done freely as a family, tasks like these are done less often and may merit some extra pocket money.
Set up a savings account for them
Many of us have a savings account for our children, but we don’t necessarily talk to our kids about it or give them any chance to contribute themselves. Setting up a savings account in your kid’s name and talking to them about it means they will understand how and why they get that money for college, their first house, or whatever they use it for in the future.
Investigate junior savings accounts or an ISA for kids and talk to them about the savings. Even if you are contributing more to it and your kids only put in a few dollars a month, it will ensure they are alert to the importance of savings accounts, how they work, and how the savings will benefit them in the future.
It’s tough keeping our kids off their phones or tablets these days, but there are plenty of apps you could get them to install which will also teach them about savings. There are plenty of kid-friendly financial apps out there. For example, GoHenry gives kids a prepaid debit card and encourages kids to budget, lets you automatically pay them when chores are complete, and has lots of additional features like quizzes, games, and spending controls.
Talk about it
The best way to teach your kids about savings is to be open and transparent about savings with them. That means talking about what you may be saving for – such as your next family vacation or your retirement – and explaining to them how and why you’re saving money. Having conversations about money with kids doesn’t mean they need to worry about your money, instead, it can encourage them to recognize that their next family vacation or the new family car were bought with savings.