TAKE 5

5 Ways to teach kids how to save money

By SUZANNE PACEY
Posted

Saving doesn’t come naturally to most of us. When you’re young, it’s hard to grasp the real value of money. Saving is one of life’s most important skills to master. If you’re a parent of a small child or teenager, here are some ideas to get you started.

The most important thing at the beginning is to make saving fun. Plus, the earlier you start teaching your children to save money, the better off they’ll be. Even toddlers can do it, but you have to teach this concept in a way they’ll understand. Then, as your children grow, you can introduce more sophisticated saving strategies.

1. Open a savings account
When your child is old enough to understand the concept of interest, you can look for savings accounts that earn interest.

2. Make a savings goal chart
Once you know what your child wants to save for, figure out how many weeks it will take, and make a chart. You can represent each week with a box and your child can put a sticker in that box once the money from that week’s allowance is set aside.

3. Look for good deals with your children
One of the keys to saving money is looking for deals on purchases. Together, you can compare prices on different websites and stores before purchasing items.

4. Play games
There are a number of games available to teach financial concepts to children. Monopoly and The Game of Life, for example, can teach money management skills as well as the importance of planning ahead.

5. Help your child prioritize
Have your child write out a wish list of things they want to spend money on and prioritize that list. Ask your child to think long-term as well. How about a nice laptop for college, a graduation trip to Europe, or even the down payment for a house someday?

Then, have your child allocate an amount of their allowance, or “income,” to each goal. These are the beginnings of a financial plan and this type of thinking will serve your child well in the long run.

Teaching your children how to save is an important step to prepare them for financial responsibility and a secure future. But it won’t go very far if you don’t “practice what you preach” and save for the future yourself. Whether we like it or not, most of us take after our parents and emulate the habits we observed in them during childhood. In other words, you need to act how you want your children to act when they grow up. ■

Source: www.moneycrashers.com

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