Kids today gain levels of sophistication and tech savviness at earlier ages than ever before. But this is a complex world and, more than ever, parents have a key role in making sure their children are equipped to deal with every complexity – and developing strong money management skills should be among the most important for helping your kids achieve their life goals, lead a better life and help others. You will find below tips on teaching your children the importance of saving money!
Why Your Children Should Save Money
As a parent, your job is to teach your children. There are many things you will teach them, starting at birth and even after adulthood. Of the many things you will teach your children, one of the most important is how and why they should save money.
Here are some tips for teaching your children the importance of saving money:
- 1. Talk to your children about money, starting at an early age. Some parents put off these talks until their children are teenagers, or even grown. It’s important you don’t shy from money talk even when your children are young. This is how they will learn.
- 2. Help your children learn the value of money by having them earn things that they want. If everything is always given to them on a whim, they will think this is how it works for adults as well.
- 3. Teach your children that sometimes you have to save up for things that you want, especially large purchases.
- 4. Explain the ways that having a savings can help during an emergency.
- 5. Allow your children to experience money from a young age.
You could take them shopping on a budget (it can be as small as $5) and teach them about managing their money, or as they grow older, talk to them about how to budget for a household and how to manage bills.
With these tips in mind, you will be well equipped to start teaching your kids about saving money. Remember that just as important as what you say, your children will watch what you do, so be sure to set a good example.
Teaching Teens How To Save Money
Some teens seem to be born with a money-saving gene. Others don’t quite grasp that money doesn’t grow on trees. It can be difficult for teens of any personality to save money when they don’t earn money regularly. Most teens get money from only a few sources: gifts at birthdays and holidays, a part time job, or allowance. Let’s look at 4 tips on how teens can save money!
So how can teens save money? Here are some ideas:
1. Save before spending
Each and every time you get money, whether it’s allowance or from a part time job, take some out for savings before doing anything else. Some people call this “paying yourself first” and it’s an important habit to learning to save.
2. Be smart with your ATM/bank card
If you’re tempted to overspend when you have your card on you, take out cash for what you need and leave your card at home. Be smart with subscriptions that can charge your card even when you’re not actively using them.
3. Make use of student savings
There are many stores and restaurants that will give you discounts up to 10% off when you flash your student ID.
4. Make use of reward cards and cash back apps
Most teens today have smart phones and they are more savvy with apps than their parents. There are tons of coupon and cash back apps that let you save money and/or earn cash back on purchases you make already. That trip to the mall could earn you money back for your next trip!
With these ideas on how teens can save money, you’re ready to help your teenager start forming great money habits that he will take with him for the rest of his life. If he can learn to save now when he’s just bringing in some extra spending money but his main needs are taken care of, it will be easier for him to save when he’s off on his own and it’s very important.
Teaching Children About Saving Money
New research reveals that Canadian parents are very proactive when it comes to teaching their children about personal finance – with 82% of parents frequently or sometimes having conversations with their kids about good money habits. It’s important to start dollars and sense talks early with your children, so here are some age-related tips on teaching your children about saving money to get you going.
Start with a ‘fun’ bank they can fill with coins; eventually graduate to a ‘real’ bank account and an allowance tied to certain tasks to learn responsibility. A fixed amount allowance is best because it teaches that there are serious choices to be made about spending and saving. Deposit at least 10% of their allowance in a bank account and explain how interest makes their money grow. Board games like Monopoly and interactive websites such as the Canadian Foundation for Economic Education are also great money education tools.
Develop a simple budget that includes keeping tax receipts and statements to keep track of their money. A charitable giving component will show them how their money can have a positive impact on the community. Give an allowance ‘bonus’ for special work with the requirement that the extra money must be invested. Introduce the concepts of ‘compounding’ and tax-saving through such long-term investments as a RRSP eligible investment.
Have each child file a tax return as soon as they have a job that results in a T4.
It’ll give them a more ‘personal view” of taxes and build up future contribution RRSP room. Co-sign for a low-limit credit card and carefully monitor its use. Stress the importance of making monthly credit card payments to maintain a good credit rating and avoid high interest rates or late fees. Use credit card statements to discuss spending patterns and best use of purchasing power.
More Financial Tips
- Involve you kids in family financial discussions.
- Show how your family budget must balance expenses and income.
- You can even start playing ‘money games’ with your kids as young as two years old.
Teaching your children the importance of saving money will help them develop their own feelings and values towards positive habits such as saving and spending. Not sure where to start? Feel free to contact your financial professional for some ideas.