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Jun 03, 2023

Teaching Kids Financial Literacy: The Importance of Instilling the Habit of Saving

As parents, we all want our children to grow up to be responsible, independent adults. One important aspect of this is teaching them about financial literacy and money management, including the habit of saving. By instilling this habit early on, we can set our children up for success and help them build a solid foundation for their financial future.

Here are some tips for instilling the habit of saving in your kids and teenagers and promoting financial literacy:

Start early:

The earlier you start teaching your kids about money and saving, the better. As soon as they can count, you can introduce them to the concept of money. 

Tips

  • You can give them an allowance and encourage them to save a portion of it.
  • Introduce your child to the concept of money by setting up a pretend store at home. Give them play money and encourage them to practice counting and making purchases.
  • Use a clear jar or piggy bank to help your child visualize their savings. Let them decorate the jar and encourage them to add to it regularly.

Be a good role model:

Children learn by example, so it’s important to model good financial behaviour. If you’re always spending money impulsively, your kids are likely to do the same. Instead, show them that you’re responsible with money by saving and investing wisely.

Tips

  • Talk to your child about your own experiences with money, both the successes and the mistakes. Share what you have learned and what you wish you had known earlier.
  • Make a conscious effort to involve your child in financial decisions, such as setting a budget for a family vacation or making a major purchase.

Make it fun:

Learning about money and financial literacy doesn’t have to be boring. Play games that and  use a reward system to motivate your child to save, and make a game out of tracking their progress. This can help your child stay engaged and motivated.

Tips

  • Play games that involve money, such as Monopoly or The Game of Life. These can be great opportunities to discuss financial concepts and decision-making.
  • Use a reward system to motivate your child to save. For example, offer to match their savings or give them a small reward when they reach a certain goal.

Use visual aids:

Creating a savings chart with pictures or symbols can help your child stay motivated and track their progress in terms of financial literacy. This can help them see the tangible rewards of saving and reinforce money management skills.

Tips

  • Create a savings chart with pictures or symbols to represent the goal your child is saving for. This can help them stay motivated and track their progress.
  • Introduce Savings Jars to collect their money so they can visualise and track.
  • Set up a display of items your child could buy with their savings, such as a new toy or book. This will help them see the tangible rewards of saving.

Teach delayed gratification:

In today’s world of instant gratification, it can be hard for kids to understand the benefits of delayed gratification. But learning to wait for something they want and saving for it can be a valuable lesson. 

Tips

  • Encourage your child to save for something they really want, rather than buying it on impulse. Discuss the benefits of waiting and the satisfaction of achieving a goal.
  • Help your child plan ahead for larger purchases, such as a bike or a gaming console. Discuss the steps they need to take to save enough money and how long it might take.

Give them responsibility:

Giving your child a set amount of money to spend on their own purchases can help them make smart choices and compare prices, improving their financial literacy and money management. 

Tips

  • Give your child a set amount of money to spend on their own purchases, such as clothes or toys. Encourage them to make smart choices and compare prices.
  • Have your child help with grocery shopping and meal planning. Discuss the cost of different foods and how to shop smart.

 

Encourage entrepreneurship:

Encourage your child to start a small business, such as a dog-walking or lawn-mowing service. Support their entrepreneurial endeavours. This can teach them valuable skills in money management, financial literacy, and business.

Tips

  • Help your child brainstorm ideas for a small business, such as a dog-walking or lawn-mowing service. Discuss the costs and benefits of starting a business.
  • Support your child’s entrepreneurial endeavours by helping them set up a website or social media presence, or by providing materials for their product.

 

Talk about money openly:

Many parents avoid talking about money with their children, but this can be a mistake. It’s important to be open and honest with your children about your own financial situation and to discuss money-related topics with them. This will help them develop a healthy relationship with money and become more financially literate.

Tips

  • Discuss financial news and current events with your child. Explain how these events might impact your family’s finances or the economy as a whole.
  • Make sure your child understands the basics of saving, budgeting, and investing. Encourage them to ask questions and be curious about money.

Use technology to your advantage:

Many banks offer savings accounts specifically for children, which can come with fun features like custom debit cards and mobile apps. Consider using a budgeting app or website to track your family’s spending and savings, helping your child develop important financial literacy skills.

Be patient and flexible:

Remember that every child is different, and what works for one child may not work for another in terms of financial literacy and money management. Be patient and flexible as you work to teach your child about money. Allow your child to make mistakes and learn from them, using these as teachable moments to discuss what they could do differently next time.

 

Incorporating these tips into your daily routine can help your child develop a healthy relationship with money, improve their financial literacy

 

You can achieve Financial Wellness by speaking with our Financial Wellness Coach in a supportive and non-judgmental environment. BOOK NOW for a free discovery call.

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