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Learning to handle money, budgeting and saving is a skill that should be taught to every child. This skill is becoming increasingly important in a world where it has become normal to expect instant gratification.
This approach to life can make it very difficult for anyone to save money, after all, it’s much easier to spend it. It’s also potentially more satisfying in the short term.
That’s why you need to start teaching your child about saving from a young age, here are our 5 best tips to teach children healthy money habits early:
1. Talk To Them
The first step in educating your child about saving is to sit down and talk to them about wants versus needs. Your child needs to understand when they need something and when they simply want something.
It’s a good idea to use your own budget to illustrate tall the bills that need to be paid and how much money that leaves to cover wants.
Of course, you also need to talk about unexpected needs, hence the need to save.
2. Earn It
The next step is for them to have an appreciation of money. The best way to do this is to pay them for doing chores. You can set a rate per chore or simply pay them a fixed rate per week to complete an agreed list of chores.
This will help them to understand the work involved in earning money and they’ll think twice before they spend it.
3. Saving Goal
To encourage your children to save set them a saving goal. Tell them that when they reach a certain amount they’ll get a treat or you’ll give them a specific extra amount.
They can also set a savings goal to allow them to purchase a specific item. Simply work out with them how much they need to save each week and how long it will take them to save the necessary money.
Then, it’s up to them to do the saving.
4. The Savings Spot
Children need somewhere safe to save money. This may mean giving them a piggy bank, perhaps with a lock on it. Alternatively, if they are old enough, they can have a bank account.
This will help them to see how their savings are building. The higher the figure gets the more they’ll be inspired to save.
5. Be The Bank!
On occasion, it can be useful to be the bank for your child. For example, if they really want something for $100 and don’t want to save then agree to lend the money to them but they have to pay it back from their allowance with interest.
Show them all the figures and encourage them to understand that having the item instantly on credit has cost them a lot more in the longer term. Waiting and saving is a good thing.
Teach them to spend responsibly using a service like Greenlight, a debit card for kids, managed by parents. With the tap of a button, send money to your kids — anytime, anywhere. No trips to the ATM, no cash, no hassle. Set flexible parental controls that are right for your family and get real-time notifications every time your kids spend money.
In short, you’re using being the bank as an opportunity to teach them the benefit of waiting for things. Ideally, this should start as they start a reputable center of early learning Bendigo, or wherever you live.