In today’s fast paced, consumer-focused environment, it is easy to lose focus on living frugally. Yet it is important that parents teach their children at a young age to put some money away in a “rainy day fund”. Here are 10 Easy Lessons to teach kids about how to save.
Have a Plan
The single-most important aspect of financial responsibility is having a plan, a budget. Teach your kids how to know what a bill is and what income is, and what the value will be after the bills are subtracted. This can be on a spreadsheet or even a regular piece of paper, as long as it lists all the income and “bills” and other purchases.
All the junk mail we get is actually good for one thing: manufacturers will often send coupons in the mail. Clip these out and teach your kids how to use them. After all, as Ben Franklin once said, “A penny saved is a penny earned”. Use the coupons for whatever you need to buy, and pay attention because many can be used on multiple items.
Don’t go over budget
Once a plan is in place, it is very essential that your kids learn to stick to it and know that if they overspend, they won’t be able to buy anything more until the next period.
Maintain a steady income
Most work is steady, so this is a key lesson to provide buy giving a steady allowance as soon as your child is old enough to understand what work is. This will help the budget process as it is a known quantity. And you can even tie it to chores in order to add lessons on responsibility.
Protect your money
A savings account may not be appropriate for all ages, but it is a good lesson to teach that money should be protected. This could be as simple as placing it in a piggy bank of sorts.
A Penny Saved is a Penny Earned
Buy in bulk
Another key lesson is that many items are “cheaper by the dozen”. At the grocery store or elsewhere, it is often better to buy multiples of one item rather than a single pack in order to have on hand in the future and save a little.
Understand the difference between “need” and “want”
Kids often see everything as a need, but it is vital from a young age to show them the difference between a true need and mere desire. This can be helped along by creating a budget. Also see below about putting money aside.
Kids can also save their allowance by learning to delay purchases. Again, a budget can help with this, along with waiting for the item to go on sale.
Put aside money for future purchases
Parents can also offer a second “piggy bank” in order to save money for future purchases. Kids should be encouraged to set aside a certain amount of their income toward their budget and for purchases that currently exceed their income. This can be budgeted or not, depending on the circumstances.
This lesson may not be right for every age, but parents can teach this version of saving by putting aside part of your kids’ allowance. Then, add a small percentage each period to show how saving money in this fashion can lead to a larger long-term payout.
Image credits to familytreasures