The value of saving money was ingrained in me by my parents at a young age. Cash gifts would go into my bank account and chores were happily accepted so I could buy my own treats at the dollar store. When the time came to splurge on an electronic or the hottest new toy, I had my own stash to dip into. Parents are the biggest influencers on their child’s financial habits, so here are our 9 ways to teach kids to save money, and they all start with you!
1. Start a piggy bank
In addition to opening an actual bank account for your children, buy them a piggy bank to keep in their bedroom. They will love it as a new toy, but also love running to their cute friend to deposit the coins and bills they receive from the tooth fairy and grandma. When it gets heavy enough to count, decide with your child if the funds will go in their bank account or be put toward a purchase of their choice. Throughout the process of depositing into their piggy bank, they’ll feel the weight of their money increasing, understand the time that goes into filling it up, and witness what happens when the piggy bank is emptied after a purchase when they have to start saving all over again - a great metaphor for the real world.
2. Assign them jobs
Even if they are too young to have a real job, giving your children odd jobs around the house or neighbourhood, like average household chores or walking the neighbour’s dog, will prepare them for saving as an adult. They’ll understand the responsibility needed to maintain their position as a babysitter or person in charge of setting the dinner table, the time that goes into earning a few bucks, and the principals of saving and spending hard-earned wages.
3. Give them a debit card
When they outgrow a piggy bank, open chequing and savings accounts for your children and encourage them to make regular deposits at the bank. Give them a debit card to use while they are out with you. They will start to learn how to use plastic for purchases - and that just because you can’t see the money being spent when you easily swipe your card, your funds are actually decreasing.
4. Learn to say no
Just because your child wants something, doesn’t mean they have to have it - today. Explain that something may cost a lot of money, but that you - or the child - can save up for it and buy it in the future once you have enough spending money. Even if you can afford that toy now, delaying the purchase even by a week will show your child that instant gratification isn’t always the case - most times, you have to work hard for what you want. It also teaches them to think about what they really want and to not make impulsive purchases. In a week or so, if they still want that toy, it will be there.
5. Give an allowance
Whether a weekly, monthly, or individual task allowance works best for your family, giving an allowance is one of the best ways to teach kids to save money. Giving them $5 for cleaning their room to put toward a visit to the corner store teaches them that they have to earn their money before they spend it. Letting them count and spend their own money teaches them money management skills and the responsibility of having money in your wallet. Plus, their spending habits may change when they have saved up for it themselves. The same goes for when you’re on vacation or a day trip. Give your child a set amount of money they can spend. It’s the same as if you were going to pay for lunch or souvenirs, but this way, your child can feel mature, learn what things cost, and try to budget accordingly for the day.
6. Teach the difference between wants and needs
Before making a purchase, ask your children if they really need it. Explain that if the answer is “no,” it doesn’t mean that they won’t or shouldn’t get it, it just means that they need to honestly evaluate the differences between wants and needs. Once they identify their desire as a “want,” ask if they are sure they really want it and if they are willing to spend their own money on it. It’s a different thought process when something is handed to you versus when you have to buy it yourself. Wait it out - if they still want it in a week or two after they have saved for it, let them buy it.
7. Set a good example
Demonstrate good money habits in your household so your children can see it in action. Have conversations in front of your children about whether or not you should make big purchases and how long it will take you to save for what you want, whether it be a new car or a couch. Have them search for sale items in flyers and in stores with you and bring them along for trips to the bank. Let them hear you prioritize what you want versus what you need, and what purchases can wait for the future. You can also explain the value of donating and being socially responsible - giving your money to others together helps put your own financial situation in perspective.
8. Make saving fun
If your child has a specific goal or purchase in mind, find a fun method that works for you to track and reach your goal. Have a special envelope or piggy bank that you can add to, or create a chart on the wall with different benchmarks. Write down the item’s price and how long it will take to save it; this way your child will comprehend exactly how much money and time goes into achieving the reward. You can also play games like Monopoly and make-believe visits to the grocery store with a customer and cashier to learn how to handle money.
9. Let mistakes happen
Small mistakes like buying a cheap piece of jewellery that breaks or a book that never gets opened is okay when your child is just learning about money. Splurging on something you don’t need, will never use, or something low quality is better to happen now when kids are experimenting with $10 as opposed to hundreds or thousands of dollars as an adult.
Parents have a huge influence on their child’s financial habits. Teaching money to children isn’t hard - it just requires a commitment. Use these tips to teach kids to save money and help them develop healthy money habits for life!
Invisor offers Canadian investors personalized investment management solutions at a fraction of the cost of traditional advisor models, without requiring any minimum investment amounts. Get started now to tell us a little about yourself and your goals, and we’ll find an investment solution just right for you.
If you liked this blog post, please feel free to share it on your favourite social media site by clicking on the links below.