As adults, we know the importance of saving for a rainy day and this is a habit we must instill in our children at a young age. Just as we teach them and train them how to be mannerly or how to behave we must also teach them how to save. The standard and traditional way of teaching children to save are with a piggy bank; this is still a great way to introduce your child to saving but it can be boring. It is basically a set it and forget it approach. Your child sets the piggy bank on their nightstand and as they find change around the house or they receive small monetary gifts from family and relatives they put in their piggy bank. This works great in the beginning but to really teach your child about saving money you have to be creative. You have to find ways to make them interested in it. And so here are five creative ways of teaching a child to save and about money:
Be the example
As with most of my posts, I always say to be the example. I feel strongly that child will emulate what they see, and so if you want your child to save then you too must do so and let them see it. Now how do I show my child I am saving you ask… I know you are not going to show them your savings account but you can have a money jar visible in the house that your child is able to see you putting money into it. Rather than spend any loose change we simply throw it in the jar that sits on our kitchen counter. This is simply to show your child that you are walking the talk.
Playing games is a fun and simple way to teach children about money. How do you take a boring subject and make it fun for kids? Use Pictures. The best way for children to learn about money, especially young children, is with few words and more pictures. Use your artistic ability or the little that you have to teach your child about money :).
You can use drawings to show the child how to allocate money in different buckets for giving, saving, and spending; you can play games with play money where you allow the child to be the banker, sales clerk or customer, allowing them to role play. Playing the game of monopoly, this may be better for children a little older than your four years old. It will help them to manage their money and with making financial decisions.
Playing games will make money talk fun and easy for children to understand. These are not principles or concepts your child will learn in school, so it is your responsibility as the parent to teach your child about money and saving. These principles are important in helping your child to make more responsible financial decisions as they get older.
Set a goal
Setting goals is a great way to encourage saving. When the child has a destination they are more eager to reach that goal. You may set a goal to buy something or even to go somewhere. The purpose of your child saving is not to build wealth but to develop healthy money habits. Have money jars that represent separate goals. For instance, your child may have a money jar labeled “Doll House” and “Circus”. They are saving to buy a dollhouse at the same time they are saving for a trip to the circus. They set a goal of what they need for each jar. This makes saving fun and exciting experience for the child.
Talk about money
I know you are probably thinking how do I talk to my child about money? At what age should I begin talking to them about money? What do I say? Well, it’s quite simple. When they are old enough to ask mommy and daddy to buy them things they are old enough to understand that things cost money. So when they ask to go to the store to buy that expensive toy, rather than just going out to buy them whatever it is, you simply say “sure we can get that toy but first we need $xxx to pay for it. We have to pay for the toy before we can bring it home, so let’s start saving some money so we can go get that toy”. Never say “we can’t afford it”. This phrase will only cause your child to worry that you may be having financial difficulty, and no child should have to bear such a burden.
So rather you tell them how they can get the toy. This will, of course, open the door to more questions and there goes your dialog about money. Talking about is helping your child to understand that when wanting something they need to save for it. It is a habit that will last a lifetime.
Giving matching reward
Nothing will encourage your child to save more than knowing they will receive a matching reward. If your child saves $20 at the end of the month you add $20 to that. This is like the 401K match your company provides. Oh yes, you are not only teaching them about saving for the present but you are teaching them the fundamentals of saving for retirement. Imagine your child goes on their first job, the company offers a match to their contribution to their 401K plan and your child understands the concept and knows that they should take advantage of it. It’s a beautiful thing :).
Knowing that they should save for an item they want will teach them to spend what they have rather than reaching for that credit card when they don’t have the funds. They will understand the concept of saving for a rainy day, having an emergency fund, and they will understand the concept of retirement, something many adults struggle with today.
If you are reading this and you are not a saver, teaching your child about saving will also help you, it will force you to save…remember the first rule. Be the example!