Did you know that 60% of Americans don’t have enough savings to cover a $1,000 emergency?
Even with all the money-saving advice out there, many of us still struggle to make ends meet — let alone build up interest on savings accounts. If you’re a parent, no doubt you want to do your best to teach your kids about money so they’ll have a solid financial future.
Here are five tips to get your kids excited to save money.
1. Differentiate Needs & Wants
Many adults struggle with this concept, so your kids definitely need plenty of guidance in this department. Pull out your own budget and show them in writing the difference between the things we need to pay for and the things that would be nice to have.
Housing, food, transportation, and clothes belong on your “needs” list. Make a separate list of things your child wants, such as movie tickets, a new bike, or the latest video game. Explain that we need to use our money to pay for needs first while we save to pay for things we want.
2. Trade Chores for an Allowance
Did your parents ever pay you a few bucks to mow the lawn or wash the car? Why not teach your kids about money by letting them earn their own modest allowance in exchange for household chores?
In 2019, the average allowance was around $30 a week. That doesn’t sound like much, but at this rate, your child could theoretically save $1,500 in a year. It’s also a great way to start instilling a good work ethic in your child.
3. Educate Them About Saving Money
Spending money always seems more fun than saving it, so you need to explain some money-saving benefits to your kids.
For example, do they understand that they can earn more money simply by keeping their savings in a bank account? Take a look together at the best short term investments (savings accounts, money market accounts, etc). Do the math so they understand how to turn their savings into more money over time.
4. Offer Incentives to Save Money
Have you ever worked for an employer that offers a matching contribution to your personal savings plan? It’s a powerful incentive, so why not try the same thing with your kids?
Let’s say your son is trying to save $500 for a new tablet or video game console. Can you offer to “match” $250 if he’s able to save $250 on his own?
5. Let Your Kids Make Mistakes
Have you heard the saying, “Mistakes are the best teacher?”
Resist the urge to micromanage your child’s spending habits and let them make a few mistakes of their own. If they blow their hard-earned savings on an item that wasn’t worth it, you can use this moment to teach a powerful and memorable lesson.
Ask them what they’ve learned about saving and spending money and how they can make better decisions in the future.
Teaching Your Kids to Save Money: Start Today
Kids don’t often realize money-saving benefits the same way adults do, but it’s never too soon to start. Use the tips outlined above to teach your kids how to save money (and enjoy it).
Now that you know how to teach your kids about money and saving, what’s next? Keep browsing our site for more great tips and advice!