If you were not one of the lucky ones who lived in a home that explicitly taught the importance of smart spending and saving habits you’re far from alone! You also may have stumbled, learning hard lessons along the way. These forays may have led to to questionable decisions, including creative budgeting habits, massive credit card debt, or even bankruptcy.
No parent wants their child to experience these expensive growing pains. The easiest way to teach your children good saving and spending habits is to exhibit them yourself. Then talk about good habits with them…often.
Naturally, these should be age-appropriate lessons. A two-year-old will simply not understand the importance of saving for a rainy day (“It’s raining today!”). Useful financial lessons ranging from counting up change in a piggy bank to increasingly longer-term goals, like a teenager saving for a car or opening their first checking account. If you’re looking for ideas, Parents Magazine offers an age-appropriate breakdown of activities to encourage children to save.
Saving Tips for Elementary Students
For example, elementary-school children benefit from short, concrete exercises to build their saving muscles, like saving up to buy a coveted item. Aim for something achievable in a short period of time (think less than a year), so they can see tangible results and reap the benefits rather quickly.
Once they purchase the item, that is a good time to set up their savings or emergency fund. To make it concrete, help them think about the money it would take to fix or replace their purchase. Did they buy an iPad? Help them see the importance of saving money towards the likely (okay, inevitable) event that it will be dropped, and the screen will need to be replaced.
Make Learning About Money a Game
Make this fun by gamifying it. Two or more children can race each other to save faster. You can join, too! Keep charts on progress where everyone can see them and talk about ways to save even more. Can they do more chores for extra income? Forego buying gum or candy at the store and put that extra money into the savings account? Older kids can be taught the “magic” of compound interest.
Use Good Old-Fashioned Lists
To encourage good spending habits, involve children of all ages in creating a shopping list, then bring them to the store and only buy the things on the list. Set up the expectations before you hit the stores and all of their temptation. Curb impulse purchases by talking about the reasons why something will not be going in the cart: “It’s not on the list,” “That item would exceed the amount budgeted for the trip,” or “There would need to be a trade-off and not get another item on the list.” This is also a great opportunity to explain the differences between “needs” and “wants.”
Whether you want more ideas on how to encourage very young children to save or are ready to discuss formalizing lessons with a REAL bank account, come visit our team at your local Standard Bank office. We welcome you to bring the whole family! At Standard Bank, we know teaching children how to save is an important life-long skill, and we would be happy to be a part of that experience.