Five tips to teach your kids the value of money
Every parent wants a bright future for their children. And teaching your kids some basic financial knowledge could really set them on the road to success. To help your kids learn the value of money and get them saving, we’ve prepared some handy tips.
Teach the difference between ‘needs’ and ‘wants’
As a parent, you’re probably thinking kids only really understand the concept of ‘wants’. After all, you pay for all the basic ‘needs’ for them. Yet teaching them that ‘needs’ include the essential things in life, like food, clothing and shelter, compared to ‘wants’ that are all the extras, can help them understand the difference. It can also help them learn the value of saving when ‘wants’ are not always possible in a budget.
Get them earning and managing their own money
Whether it’s giving your kids an allowance, pocket money for chores, or even a part-time job, putting money into their hands for doing something shows them that it doesn’t just appear out of nowhere. Doing household chores like tidying their room, taking out the garbage or walking the dog in exchange for money teaches responsibility and shows them the value of hard work. If they value the money they’ve earned they should be less likely to part with it easily.
Help them with goal setting and budgeting
To reinforce the value of money, help them set a savings goal. Then sit down with your kids and create a budget and savings plan to help them reach that goal. Talk to them about goals they’d like to achieve. Is it the latest tablet or headphones? Writing down their goals can become a good reminder of why they’re putting away their money. Knowing how long it may take to reach that goal can also keep them motivated.
Keeping their savings safe and growing
While the idea of storing money in a piggy bank and coin jar may be good for very young children, they aren’t the best places to keep money safe or out of reach – particularly for 10-17 year olds. There are some great bank accounts that really look after older kids and their savings, with no monthly fees or transaction fees. Some also come with transaction cards, as well as mobile and online banking access, allowing your kids to manage their pocket money on the go and watch their savings grow. A high interest youth savings account will help their savings grow even faster with their money earning interest. Having their transaction and savings accounts linked with the same financial institution also makes transferring money faster and easier to track.
Help them save with an incentive
Saving on a minimal income can be demoralising when a savings goal appears so far away. To maintain motivation for saving, why not incentivise your kids’ saving habits by offering to match dollar for dollar what they save, or rewarding them when they hit a milestone. Positively rewarding good saving behaviour can not only help them in the short term of reaching their goal sooner, but also instills good lifelong saving habits.
By following just a few of these simple tips, your kids will learn the value of money and saving, which can not only help them now, but well into the future.