"TEACHING KIDS TO SAVE": HOW TO TEACH CHILDREN ABOUT MONEY AND SAVING
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"TEACHING KIDS TO SAVE": TIPS ON HOW TO TEACH CHILDREN ABOUT MONEY AND SAVING
My eight year old came back from school one day and told me that their teacher asked them what their parents say about money. He said "they never talk about it." I was so disappointed because I talk so much about it - I guess he couldn't make the connection at the time. But I was also glad that unlike other kids, he did not have any negative messages to relate either. Other kids said their parents fight about money, some said their daddies shout "I don't have money!" I said to him "all you needed to say was that we say if you save money, you'll get more of it and have more and if all you do is spend it, you will end up not having any."
HOW DO YOU TEACH A CHILD ABOUT MONEY AND SAVINGS?
"TIPS ON TEACHING CHILDREN ABOUT MONEY/FINANCES"
Kids need to be taught about both the present and future value of money.
The rich do not get rich by spending money - this is a fact that even a preschooler can master - if you spend money, you no longer have it.
Here is a list of a few things I teach my kids about money
- Everytime I give my eight year old pocket money, I encourage him to enjoy some and save some. Whatever he'd saved, he shows tome and we put it into a piggy bank - I top it with some 10% interest!
- I let my eldest read newspaper articles on bankruptcy, house and vehicle reposessions. I normally explain things to him since he cannot understand all the economic / financial terms. I would tell him that sometimes parents lack good judgment and would buy their children every expensive toy they want instead of securing a home and education for them - which are more important than a toy could ever be!
- We use online financial calculators to project how much he could have if he saved only a little in an interest-bearing account, from an early age.
- Read and go through mortgage/bond accounts with the children. Explain to them how interest works. Children, unlike most adults, are quite clever and realistic - if they could understand that a higher interest "punishes borrowers" and "rewards savers", they would all want to save.
- Instant gratification is most parents' enemy which they also practice and pass on to their kids. I teach my children that it is okay and fun to wait for mommy or daddy to buy them something next month or when they turn 15! I would say "you know what, I have this money now but it was already committed to something else, I'll note your request and then we'll see if we can have enough left-over next month - that is after paying all the bills and after saving - if the requested item is not a necessity. It teaches them patience, and they tend to appreciate and enjoy it more when the goodies come.
- I also try to lead by example. I make sure that I have a healthy relationship with money myself and that I both enjoy and respect money. You do not want your child to become one of those people who would walk around with one pair of shoes, wishing they could have more, but with millions in the bank. At the same time, you don't want your child to become one of those who buy a pair each month, or worse, each week, in the name of 'just loving shoes'.
- The message to kids is simple: you do not get rich by spending more than you can afford, or by spending what you do not have. Use your time wisely and start saving early.
By all means, do not deny yourself and your loved ones the things that they need, and a little luxury here and there. Just as long as you know how to "pay yourself first!" Pay yourself first does not mean you should get yourself a nice handbag first and then pay the bills, it means you should save and earn interest on your savings before you spend on that bag, which I would imagine, you trully need.