A piggy bank can do miracles if you want to teach your children the concept of money. It is important kids understand why you need money, how to save, long-term and short-term goals and how to avoid spending all the money you have. A piggy bank makes saving funny and educational, and can help kids learn the ropes of financial responsibility.
How to manage money is often a forgotten subject in most schools. They learn the basics, for example counting money, identifying the different coins but parents have to teach them the necessary skills for money management. A piggy bank can help them in almost every aspect how to deal with money.
Here are some ways how a piggy bank can help to teach the necessary money skills:
*Understanding where money comes from
Children often think parents get their money upon their request. It is important they know money doesn’t grow on trees and they have to work to earn money. It is useful to involve your kids in your daily tasks and you give them a coin for every task they perform which they can put in their piggy bank.
*Understanding why they need to save
It is important they understand they need to save for something they want to buy. Nobody possesses always the money to buy the things they want. Teach them to save always a portion for a certain goal, maybe a new game. It is important they understand they may not spend this money for other purposes and that they only can spend this money when they have enough money in their piggy bank.
*Understanding the importance of saving money on a safe place
It is best you teach your children to store all their coins in a piggy bank. It is important they know money is valuable and need to be stored on a safe place. It is a bad habit to have their coins in different places of the house. Money needs to be handled with respect and if they store every coin in the piggy bank, they will develop a habit to care for their money with respect.
*Understanding the benefits of saving money
It is best you use a piggy bank to compare this with a real bank. It is important you teach them the importance of saving and the benefit of accumulating interest. It is best you reward your children for every coin they put in the piggy bank. They will easier understand a bank pays interest for every amount they put in their savings account. It might be a good idea to count the money they have in their piggy bank on the end of every month and you can add a certain percentile of the saved money in their piggy bank. It is wise to explain this money is the interest they have earned, just like real banks do.
*Understanding to make priorities in life
A piggy bank can help to make choices in life. They may understand the concept of money but it is wise to teach them the difference between the necessities and the desired items. It may help to use the piggy bank for buying first some necessities in life. It is important they make priorities and buy first things which they really need before they spend money on some new games. It may help also to help to distinguish short-term and long-term goals.
*Financial responsibility
It is maybe wise to use a money savvy piggy bank. It is a smarter piggy bank than the most traditional ones and has four different chambers (save, spend, donate and invest). Once they know the differences between saving, spending, donating and investing; they can make a plan to put monthly a certain percentile in the different chambers. It is a useful tool which teaches them the basics of making a budget. It is a great way to control their own finances and will help them in their further life.
Piggy banks are a fun way to teach children the basics of money management. It is important to start early and the rewards will help them to live within their budget and to stay out of debt. It is a learning process and parents can always interact when they fail in some aspects of money management. The rewards of using a piggy bank to teach your kids money management can be compared with Benjamin Franklin’s words “An investment in knowledge always pays the best interest”.
Parents who take the responsibility to teach their children money management will be happy when they take financial decisions wisely and with responsibility once they are adult. A piggy bank can do miracles to help children succeed in life.