You can’t get your child to save their money unless you give them something to save it for. Saving money is a habit that must be developed over time. It’s not something that either comes easily or happens overnight. You have to work at it and dedicate time and energy towards that end.
But in the end, it will all be worth it when you see your child growing into a responsible adult with sound financial habits. There are many ways to help your child develop an awareness of the value of money, as well as good saving habits from an early age. These tips may help you along the way:
Set up a regular savings plan.
As with all things in life, developing a regular savings plan will help your child get in the habit of saving. It will become a part of their daily routine and they will learn to appreciate the benefits it brings them. You can set up a regular savings plan in one of two ways:
1. Regularly transfer a set amount of money into a separate savings account. In this way, your child will see the money being transferred and will be more aware of it.
2. Have your child set up a savings goal. For example, your child wants a BMX bike. He/she has $150 saved already for this. Your child now has a goal amount to save each month in order to meet that goal. Once that goal amount is reached, he/she can either save for another goal, or can make the decision to purchase the BMX bike. At that point, the money can be transferred over to his/her savings account.
Help them pick what to save for.
One way to help your child decide what to save for is to introduce him/her to the idea of a “wish list”. This is a list where your child writes down all the items he/she would like to purchase in the future. The key here is to make it a wish list, rather than a must-have list.
This way, your child will appreciate what he/she has and will be able to save for items that are on the list over a long period of time. With a wish list, your child can start to understand the value of money and the benefits of saving.
Set up a mini-bank account.
A mini-bank account can be a great way to teach your child about the benefits of saving. When your child has saved up a certain amount, transfer that money into a mini-bank account. This account is strictly for savings and not for spending.
Your child will see that his/her money is growing, and that it’s being put to good use. You can set up a regular transfer from your child’s savings account to his/her mini-bank account. This way, your child will be responsible for growing his/her money.
Have them pay themselves first.
When it comes to the concept of saving money, it’s important to teach your child to “pay themselves first”. This means that your child should make saving a priority, and should be saving as much of his/her income as he/she can. One way to help your child get in the habit of saving is to have them open up their own savings account.
At a young age, however, a savings account probably won’t be necessary. Instead, you can encourage your child to put their savings in a piggy bank, or in a jar, or even in a special box. The important thing here is that your child is putting the money away for safekeeping.
Two seemingly small, but important habits.
When it comes to developing good financial habits, two things are important: paying yourself first, and tracking your spending. When your child is young, paying themselves first will mean putting a certain amount of their allowance into their savings account. As they get older, it will mean setting a certain percentage of their income aside towards their savings. In order to track your spending, you can create a budget.
There will come a time when your child will fly the nest and go out on their own. When that time comes, there are a few things you can do to help them start their financial life off on the right foot. Your child’s first job is an important milestone. At that point, your child will be receiving a paycheck for the first time. You can help them understand how important it is to start saving for the future.
You can help them set up an automatic savings plan, or encourage them to set up a regular savings plan, where they set aside a certain amount of their income each month. You can also help them track their spending. You can help your child develop good financial habits by introducing them to all these concepts at a young age, and by helping them to set up a savings plan. With regular reminders, and a little bit of help, your child can learn to value money and will be able to reach their financial goals.
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