In a society that places enormous emphasis on financial stability and independence while simultaneously advertising the newest and most expensive cars, vacations, and gadgets, it is imperative that children learn at a young age how to save and be smart with their money.
However, children do not simply learn these things by themselves, and it’s not always as simple as telling them how important it is to be smart with their money.
Many parents believe that it is enough that their children see them exhibiting healthy spending and saving habits, and that their children will imitate their behaviors when the time comes.
True, parents’ most lasting tools for teaching their children are their own behaviors, but there are many other helpful tools that are interactive and simple enough to help cement these habits into children’s minds.
One such tool is commonly referred to as money matching. When a child gets money for a holiday or earns a paycheck, many parents will offer to match that money, thus doubling the profit for the child, assuming that the child puts the money away into a savings account. This method is effective in showing children how effective saving is in the long run.
If your child is too young to understand the concept of having money in a bank, the same idea works with a clear jar. Instead of money matching if they deposit their money in the bank, try having different jars labeled “Spend” and “Save”. That way, your child is learning to put money aside, but they can still see the money they have saved.
Another very effective way of teaching children lessons about money and life in general is to stress cause and effect. Remind your child that if they make a big purchase, they won’t have any money left to spend later on.
Similarly, make sure that you’re not rewarding your child just for existing. An allowance is a great way to help your child learn about earning money, but it’s important that they do earn it. Set up a job chart that sets out specific monetary rewards for each chore, and as the chores get done, the money gets earned.
Perhaps the most entertaining way to teach children about saving money is by playing games that incorporate physical currency. Monopoly is a classic, but there are many age-specific games that require players to earn money in order to pay for things like gas and food. These low-stress and low-risk simulations are helpful in creating a thoughtful mindset about money and how it is made, spent, and saved.
Regardless of the method, it is crucial that children begin learning from a young age the right way to think about and deal with money. With proper guidance, they can grow into economic professionals with sound money managing skills.
See you next time around!
Matt Panzo | CEO & Co-Founder