Every parent should understand that teaching children the basics of financial literacy is one of the most important things for their future. Of course, moral and social values are just as important, but it is the question of teaching children to save or plan their expenses that is often ignored.
And this is a big mistake because a child who does not know how to manage even small sums usually grows up to be a helpless and wasteful adult. As a result, they spend their salary during the first week and don’t have extra cash for their hobbies, for example a Netflix subscription, betting at https://22bets.in/, or buying a new expensive graphic novel.
So, here are some tips to help teach your child to save money.
What Is Money and Where Does It Come From?
Should I talk to my children about money? Of course you should although at first glance it may seem complicated or even unnecessary, especially when it comes to young children. But children should understand from an early age that bills and coins do not multiply by themselves. This is the only way to make it clear that money does not forgive waste. To do this, include the topic of money in your daily life. For example, take your child with you to the store, where you show that there are cheap and expensive items, compare their price and benefits. After buying, discuss how much money you spent and whether you could have saved. Do the same if you want to buy a new TV, a car, or go on vacation. Your child needs to understand that any service or item costs money.
Start giving pocket money when your child goes to school. As for the amount, $5 a week is enough if your child is about 8, then increase it to $20-30, and in middle school, to $100 or more. Give out money on the same day and on a regular basis, regardless of whether the child got an A or a C. So, the amount should not depend on behavior or performance because your goal is to teach planning.
Set clear rules and be consistent in following them, especially yourself:
- No prepayment! Once the child has spent all the money, he should wait for the next payday. This is one of the main ways to teach him how to handle money rationally.
- No credits! The same principle applies as in the first case. If a child wants to buy something or a toy, he should only count on an agreed amount, from which he can save for the desired purchase.
Encourage your child with extra rewards. Always give bonuses for good grades, extra chores, etc. It is incentives, not fines, that are the best motivators. But be careful not to turn incentives into a way to make money. It means they should not be systematic.
Teach to Save Up for Big Wishes
With pocket money, children will gradually learn how to save. Start by telling your child that they have to save half the money themselves and their parents will add the other half. If they run out of money faster than their weekly due date, discuss the issue. Find out what most of the pocket money goes to, and then work together to see if there is a way to save.
Show your children how to keep a budget, where he should record all his spending, and at the end of the week or month you together sum up the results. At first glance, this advice seems simple. But have you ever kept such records yourself? Only in this way can you notice a lot of small expenses, which turn out to be unjustified.
Of course, in an exceptional case, you can give a large amount, but it is not recommended. If the purchase is not urgent and the child can save the necessary amount within a few weeks or months, it is advisable to wait. He should see that not all wishes can be realized immediately.