6 Ways to Teach Kids to Save Money
Stories abound about stinking rich heirs and heiresses burning their wealth down to the ground in a matter of a few months. While you may be no liquor baron, you would, without a doubt, want your child to understand the value of money. Read on to know how you can teach kids to save money.
1. Start a piggy bank
The good old piggy bank days seem to have lost out in the era of parents scrambling to provide for every need of their wards. Needs have undergone a sea of change – a tablet is no longer a high end luxury but rather a pretty standard requirement. In such a scenario, children as well as parents do not see the need for a piggy bank to provide for small purchases. However the piggy bank serves a very important purpose. It automatically spurs the habit of accumulating money to fund future purchases, as well as helps in slowly developing the habit of keeping account of money received and money spent. There’s a reason why it is called a piggy ‘bank’.
2. Teach basic finance
Often it is usually after putting in a few years at a job do people really start to think about investing and growing their money. Often the realization that money kept idle in a savings bank account is losing value is met with disbelief which slowly leads to a realization of how much money has already been wasted due to ignorance. Save your child from that and teach them about basic things like fixed deposits, savings accounts, loans, compound interest and other related concepts. This can be done when the child is more or less well versed with basic concepts of math so that he or she can understand the concept properly. An understanding of how the world of finance works will inculcate an appreciation in his or her mind about the mechanisms for conserving and growing money. The child is then likely to look at saving as the first and basic step towards financial independence and view the activity more favorably.
3. Reward good saving behavior
We all work best when we receive incentives for our work and your child is no different. Reward good saving behavior in whatever way makes your child happy. This need not be a very stringent practice. However, over a period of time, it will help your child internalize a mechanism for saving money.