Children are certainly not adults, and shouldn’t be expected to act like them. While saving money might feel very much like adulting, it is one of the many ways we can guide our children to learn healthy life management values, early on. You wouldn’t give a child thousands of dollars and say, “Here, do with it what you will,” but rather, you would teach the child the value of the money, so they are able to fully respect it, during their formative years, and beyond.
Teach Children that Hard Work Pays Off
Depending on the child’s age, set aside a checklist of extra chores which they can do to earn money. People have varying viewpoints when it comes to children, chores, and allowances. A reasonable strategy is to have one list of chores that every member in the family carries out, to help provide family continuity, and unity; and another that can be performed to earn ‘extra credit’, and in this case, money.
Let the Child Handle the Cash
Once the child has earned their hard-earned cash, hand it to them, via a combination of coins, and soft bills, so that they can gain a feel for the money itself. When they get older, and are familiar with the meaning of cash, consider payment in the form of customizable Visa gift cards, to propose a new level of monetary education. The card, acting much like a debit card, will help them gain a sense of responsibility. By purchasing a customizable card, using a favorite family photo, or a picture of their best friend, you will help guide them in the direction of savings. You can even express your support in text, by adding a thoughtful note to the card, such as “Way to go,” to foster a sense of accomplishment.
Take the Children to the Grocery Store with You
Most children love Fruit Loops but have no idea how much this brand of cereal costs. Do some comparison shopping with your little ones, especially once they reach the age where they can consistently count. Spend time cutting coupons together, writing out the grocery list, and deciding what healthy meals, and snacks will be purchased. As you continue on your economical journey, they may be the ones to advocate for store brands, as opposed to the higher priced names.
Create Visual Accounts and They Will See the Growth
When children earn money, teach them that some of it should be used for savings, some should be allocated for spending, and a portion of their choosing, should be given to charity. This can be done with jars, piggy banks, or anything transparent, to watch the funds grow. Label each vessel, and help your child see that, ideally, one-third of their money earned, is being allotted to each jar. Help them find a charity to donate their money to once the charity jar reaches a certain amount. If they are intent on saving money for a certain item, such as a toy, or video game, you can assist them with keeping a running tally, to figure out how far away from their goal, they are; and what they can do to reach it more quickly.
Match Their Savings
To help instill the importance of saving money, offer to match their savings with whatever percentage is reasonable for you. It might be dollar for dollar, or a quarter for every dollar. Matching their savings, as opposed to the other jars, is important because it will incentivize their desire to save and will also help prioritize savings. Talk to them about why you are matching their savings, and why you chose the percentage you did. They don’t need to know the intricacies of the family budget but opening their eyes to how you handle your savvy budget, is a golden teaching opportunity.
Let Children Watch You Pay the Bills
Again, the focus here is not to show them, or disclose how much you are paying out, but rather, the necessity to pay bills on time, avoiding late fees. Describing how the normal monthly bills are acquired, and what services they provide, is another teachable moment. Consider explaining the bills with an age-appropriate conversation with regards to identifying: the mortgage, the gas usage, and electric, cell phones, screening services, water, and trash pickup costs. Giving children an inside look at the goings-on, behind the scenes of a working household, will prepare them for their own habitat, someday.
Not everyone is meant to be an entrepreneur, but it is important to instill values that lean toward the entrepreneurial mindset. Working hard, saving, being creative and adaptable, are all important skills that will help children in the future. If they face economic challenges, due to illness, or job loss, and need extra income, or want to increase their level of savings for an important event; they well be well equipped to handle almost any adversity, or added expense, and continue to flourish.