How can you Raise Money Smart Kids? Teaching kids about the concept of savings is essential in raising financially smart kids. But let’s face it, sitting down with kids and talking about saving money can be a futile process if they haven’t experienced spending it yet. The first step in helping kids appreciate the value of savings is for them to have an understanding of how money works and that it doesn’t grow on trees.
Once a child learns that money is needed to buy the things that they need and want, and that it also comes in limited supply then they are ripe for the next stage of their financial education, setting their savings goal. Here are some ways you can do to help them learn about savings and eventually think about savings goals.
Introducing the concept of savings to your kids can start out with piggy banks or coin banks that the little ones can break open and spend on what they want at the end of each year, allowances, pocket money, or a savings account of their own. Parents can show their kids that there are bigger rewards in setting a portion of their money instead of spending it all whenever they get their allowances.Start by gifting them something they can store money in.
Show them that small coins become a big amount later. We fill up our little piggy bank and would bring it to the bank to have it exchanged as a bill. At the end of the month, we have 80-100€ in it. I also find transparent money boxes effective with motivating me to put in money (pic below). Seeing it getting filled up makes me want to add more.
This can be reinforced by setting a savings goal for the child and allowing them to reap its benefits as they please. A savings goal can be as simple as filling their coin banks in the shortest possible time or saving an amount equivalent to the price tag of a desired item. Those who opt to give allowances for their children should set the terms on the things that they will provide as parents and the ones that the children will have to take-out from their allowances so that the kids will have a good idea on what they have to save-up for.
Games That Teach Savings
To raise money smart kids, there are games that you can play that will help them, or give them ideas about the value of money. There are many online games in the ready like Change Maker, it’s a fun game of addition and subtraction using coins.There’s also Financial Football for the bigger kids – an interactive football game that teaches them money money management skills.
Monopoly is a traditional board game we all know and came to love. While the goal to bankrupt your opponent seem a greedy motivation, kids can learn moving money around, tax responsibility, buying and trading properties, and developing them with houses and hotels.
Need Versus Want
Initial savings goal should be easy to attain on a short term basis so that the kids won’t get tired of waiting for their rewards or lose interest in saving money. They can gradually work their way to bigger and long term goals as they develop the habit of saving. Parents can also share some savings strategy to their kids in order to reach their goals at the shortest possible time. This can be a combination of allotting a fixed amount for savings from their regular allowances, limiting their spending to needs only, or getting savings from discounted purchases. This can help kids formulate their own plan for saving and teach them how to discriminate their purchases wisely.
Making your kids see the difference between needs and wants is a crucial factor. In this age, they are constantly seeing upgrades of items that may not be really needed. For example, portable gaming gadgets. Make them understand that it’s not a competition to having the best one out there. Also, if possible make them spend more time out playing than letting them play online most of the time.
The Power of Discounts
Speaking of gadgets, one doesn’t have to spend a lot on them, or other such non-essentials. Even basic necessities can be bought on discounts by being a subscriber. In many places, coupons and discount stickers are given out by stores to entice buyers to spend on them. One just have to be particularly cautious in buying to not overspend.
Raise Money Smart Kids Takeaways
Money can’t buy happiness, this is true in many ways. But not having a balanced view of how to spend money can also spell danger. As young as they are, kids should understand that the love of money causes many hurtful things. You can raise money smart kids by making them see the wisdom in saving up, spending properly, and using it wisely by introducing games where they can learn money management. Let them also see that it’s worth having to put something aside to use when money becomes tight later.
Sure there are many other important things kids learn before money, but as a parent with sound mind it starts with you. Buying things that are needed is an example that they may see from you. Knowing that there’s a limit to one’s budget, and explaining this to your kids will also make them gauge how practical it is to not overspend. Another thing that will make them see the fun in saving is to sell stuff on the marketplace, maybe their mint condition shoes, or a game they already finished – when they earn money, they would know its value more.
Most of all, contentment in the simple things – of things we need and not want is a way to live life better.