You teach them manners, how to tie their shoes, and how to ride a bike. But can you really teach your kids the value of money?
Short answer? Yes. And it turns out, the earlier you start, the easier it will be to develop good financial habits. Here are some practical ways to teach your youngster about managing and saving money.
Money management for beginners
The money box can empty
Let them know that we run out of money if we don’t manage it. You, as the parent, earn income, and this money goes into a box at the bank/credit union, known as a chequing account. Some money comes out with every purchase, so the box gets empty if more is taken out than parents put in.
Give them tangible examples
Give them tangible situations of money either going out or coming into your chequing account ‘box’. Explain how debit payments work when you make purchases, take them along to your financial institution to make ATM deposits, show them how you pay bills online, etc.
Play “spot the sale”
Older kids can help manage the family money by comparing prices during shopping and pointing out less expensive options. Like if their favourite cereal isn’t on sale, pick the store brand or choose a different cereal for the week. Let them help make savings-conscious shopping or grocery lists, collect discount coupons, and so on.
It’s a balance
Let them understand that anytime they ask mom or dad to buy an item, something else can’t be bought because that money is no longer available. This will help them appreciate the need to carefully think about how money is spent.
The big three
Remind them that when they do earn money from a birthday or through chores, there are three things they can choose to do with it
- Spend it on things you want or need now;
- Save it for things you may want or need in the future; or
- Donate it to help others.
Briefly explain the pros and cons of each, and the importance of balancing where their money goes (for example, not spending it all right away). Use clear jars to separate their money into the three categories. That way, they see the money growing. Yesterday, the savings jar had a five dollar bill, and today it has a five dollar bill and a loonie!
Saving money for beginners
The how and why of the savings box
Help kids understand how and why you save money. Describe how mom or dad has another “box” at a bank or credit union called a savings account. Explain how you “hide” this money for future needs, special goals, or just in case there’s not enough in the chequing account “box”.
Talk to your child about some of the goals you save towards, like vacation, clothes, a new family car, etc. Then allow them to suggest family savings goals. That trip to Disneyland isn’t free, but by making it a goal for everyone, their chance to meet Mickey increases.
Practice makes perfect
Let kids practice saving. This can be with something as simple as a piggy bank, or if they’re older you can open a savings account in their name. Get them to target something they would like to save for, like a special toy or pet, and help them reach it over time.