5 Ways To Teach Money Saving To Your Kids
By: Pinki Fri, 12 Mar 2021 4:22:25
According to a MarketWatch report, children between the ages of 4 and 14 received an average annual allowance of $471 in 2018. That’s about $9 per week, which isn’t a bad take for kids too young to join the workforce.
The report, on a study by chore-tracking app RoosterMoney, had even better news: Nearly half (42%) of children who receive an allowance save some of it. Although kids clearly don’t have the same financial obligations as their parents, that nevertheless bodes well for the next generation’s financial fitness.
* Lead by Example
Practice what you preach, if you prefer. You’re your kids’ most visible and important role model. (This may change during their rebellious adolescent years, but they’re all yours during elementary school.) By visibly following through on the fiscal wisdom you dole out to your kids, you show them that it’s possible to live within your means.
* Give Them Fake Money
It’s not as cruel as it sounds. Fake money is a great way to teach young kids about the value of money without actually entrusting them with any hard-earned cash. Think of it as training wheels for budding consumers, with you (the parent) playing the dual role of banker and merchant. Set reasonable values for various chores (cleaning up after a meal), privileges (stretching bedtime), and items (snacks).
* Avoid an “Open Wallet” Policy
Don’t give your kids an open line of credit. Instead, set constraints on spending, even if you can afford to spoil them every once in a while.You’ve surely gotten used to telling your kids “no” on other matters. Putting your foot down on requests for cash or parent-aided purchases is no different. It’s important to lay out this marker early in your kids’ financial education. The longer you wait, the harder old habits will die.
* Be Equitable
If you dole out an allowance to young children without requiring work, make sure it’s equitable on an age-weighted basis (you can give “raises” every year or quarter). If you pay wages for chores, assign equal amounts of work and an equal pay rate.
* Use Praise and Tough Love
Use a combination of praise and tough love to instill fiscal discipline in your brood. When your kid makes a deposit into your home’s “bank” or tucks a dollar bill away for a future purchase, tell them they’re doing the right thing. If you’re feeling exceptionally generous, throw in a low-cost treat, like an extra half hour of screen time that evening.