Savings accounts usually have low-interest rates and many charge monthly fees which can eat up savings. In light of all these things, that can make teaching kids to save a real challenge.
Read on for 7 tips to help teach your kids how to save.
Be A Good Example
Having a financial role model that children can look up to can really work wonders. Kids learn by example after all, they do everything we do, the good and the bad.
If they grow up answering the phone to collection agents, that’s not a good example to set. If they constantly hear you arguing about money with your spouse, that’s strike two. If there’s always a stack of unpaid bills lying around, that’s strike three.
Get your kids involved in saving money. Have them help you find the least expensive products, either on their smartphone or at the store.
Show them how to find and use coupons you get in the mail. Go to the store with them so they can see the entire process.
Match Their Deposits
There’s nothing like a good bribe to get kids to do what you want. Giving up shiny coins into a piggy bank can be tough for young kids, but if you promise to match what they have to double their money, they may be more willing to part with their pennies.
If they’re older you can do the same matching deal with their savings account. Don’t worry if they start saving too much because they’re hopefully going to use that money to pay for college or buy their first car.
Show Them The Benefits
If you’re planning a vacation or other expensive project, show your kids how much it costs and how hard it is to save for it.
Create a family savings plan and monitor savings as a group until you reach your goal. You can use a savings app that syncs with each family members’ phone so you can track the progress of various financial goals.
Then when you reach the goal, see it through by taking that vacation, buying a car or doing whatever other goal you had in mind.
Teach Them About Emergency Funds
While young kids aren’t likely to grasp the importance of an emergency fund, they will understand that sometimes emergencies happen and that money is needed to pay for it.
If you have older kids, use real examples of emergencies they may encounter and encourage them to save. For example, if you have a son or daughter buying a car, have them keep $1,000 in the bank to pay for repairs.
Put Them To Work
Whether it’s a job outside of the home or a weekly allowance for doing chores, teaching kids the value of money is as easy as making them work for it. Once they see how difficult it is to earn a dollar, they’ll be less likely to squander it.
While you shouldn’t pay them to pick up their own clothes off the floor or making their bed, you can pay them for tasks like mowing the lawn or cleaning the pool.
Teach Them About Compound Interest
Since interest rates for savings accounts are so low at the moment, it’s hard to show this principle, but you can teach the lesson using spare change instead.
Start with a dollar in a jar. Each day, add 10 percent interest and let your kids watch the money grow. At the end of the week or the month, add up all the money in the jar.
Do you have any other ways to help teach kids about saving money you can share?