Kids need to know what money is worth. An important element of teaching kids how to save is to grab their attention by being creative. An allowance along with few lessons of money management helps children with saving money. Giving a child an allowance would be good time to teach them about goals and how saving to reach their goals can be important. Motivation by offering incentives will make it easier for children to save. Children will become better savers of money by beginning early with an education about money.
An education of what money is worth should begin when children exhibits the ability to count to 100, and understand a number equals a quantity. For example, a child should be able to count five crayons if asked. Therefore, once children understand the concept of quantity, parents can begin to introduce their child to coins and currency. According to CNN Money, a child beginning kindergarten is prime candidate to begin teaching them about money. Parents should sit their child down and use spare change to teach them what each coin is worth. Paper currency should be shown to the child to ensure they are aware the green paper in used by their parents has value. Value for them may mean more crayons and extra snack and this is way a parent can show coins in currency has value. Parents may want to take the initiative to begin teaching the concept at age four. Parents will begin concept of money at this age but lessons that are more complex will be added as the child matures and begin to make their money.
The attention span of young child is quite short, therefore, the creativity to hold attention of a young child long enough to teach them the value of saving their money is paramount. Parents can make saving money a game to a young child. For example, a parent can give the child few coins and tell them its treasure and their piggybank is the treasure chest that every coin saved will save the king or queen. Parents can use pictures of a child’s favorite toy as a savings gauge to show the child progress of them saving their own money. As the child gets older, more real world situations can be used to help them save. When a child clearly understands the money has value and saving money is important, parents should begin an allowance.
By giving children an allowance, it gives them the responsibility of managing their own money. Parents should impose certain rules to ensure the child understand the money saved can only be used for certain items and situations. Therefore, they are introduced to concept of budgeting. The budget concept for younger children can be helped by using separate piggy banks or other saving places for things such as a movie budget, shopping, or snack money. As they get older, they should be gradually allowed to decide how to budget their money. Kids should be taught to pay for themselves when they begin to use a budget to save money. A savings account should be opened for child once $50 has been saved and is 13 years of age. With an allowance and a budget, the child should be taught the concept of setting saving goals.
Goal setting is very important in life. Money saving goals begin by teaching a child those things they desire can be had by a constant and consistent effort of saving their money. If it is important to them own an item or attend a function make the child aware that only way to buy it or attend a big social function is with the money they save. They must be committed to holding on to their money until they have enough to purchase what they desire. Saving goals should be realistic and they should know that if they show the effort and commitment to save; therefore, it would be a great time to introduce some type of incentive to ensure they adhere to saving goals. It will help a child to understand the concept of setting a saving goal if a child see a parent set goals and use saving methods to reach them, the child will follow an example set by their parents. Therefore, parents whenever possible should use any situation to show their child the correct way to meet saving goals.
Children are motivated when there is an incentive beyond saving money. Parents may want to provide an incentive for a child making an effort to save and reach a saving goal. For example, if the child is saving for a bike that cost a $100, the parent could offer them $40 dollars for saving $60. Incentives work well when children are making their own money. Many kids want to spend their money as soon as they earn it. However, an incentive of saving certain amount of their earning, children will be welcomed by children with open pockets. The incentive does not have to be money, but it must meet a need or desire of the child. Children will make better effort to save money when an incentive is received, therefore, Parents should not overlook rewarding an incentive for a practice that will make their child more financially responsible in the future.