22 Dec

3 Tips to Teach Kids About Money and Savings

One of the biggest task for parents is to teach kids about money. Do you agree with this? WOW Parenting believes, “Parents MUST teach children about money at a very early age”.

“Mom one day I will buy my own house, with a garden, just the way you want it,” said Rohan to his mother with a gleam in his eyes. His mom was overwhelmed after listening to this, but she very well knew how to respond to it.

She said- “Do you know how you can achieve this dream? It is possible by saving money, one rupee at a time.” His mother then gave him 3 golden rules to save.  

  1. Start saving from today at fixed % from what you get.
  2. Know the difference between need and want.
  3. Budget your expenses.

Let’s look at these tips one by one.

Start saving from today –

It’s never too late to start saving, agreed. But it is always better to start it early. Yes, that is the most important thing.  To begin with, reward them with money for each daily chore that they do. Teach them how they can still save out of that money.

Once children know how and where they can save money, you have begun well. If they love the idea, if they are thrilled with their savings, if they feel they save and hence they are smart, this idea of SAVINGS will become their HABIT.

Now that is a good start, isn’t it?

Setting budgets

When you give them money for the daily chores, don’t forget to set some monthly target for saving the money. This will help them balance between savings and expenditure. Give them money for working at home, plus, set a target for them to save and spend the money.

Rohan helped his mom dry the clothes. His mother rewarded him with Rs 50. At the same time, she said – “Remember the target of saving Rs 200 for this month? How much of this do you plan to save?”

Now Rohan saves Rs 15 and spends the remaining amount. What Rohan learns is…

  1. An ability to earn AND to save.
  2. He balances between expenditures and savings.
  3. Knows about implementing the plan for achieving the savings target.

Teach them the difference between Need and Want

Teaching them the difference between what they want and what they need can bring a lot of difference in their understanding about money. The following example would make it easier for parents to teach kids about money.

When he demands a pencil it’s a need, but when he demands a fancy pencil it is a want. Spending money more on needs rather than want is the most effective way of saving money. Small savings will lead to big amounts. We all know the saying, ‘Little Drops of water makes a mighty ocean’.

Some additional tips for parents

  • Always Appreciate.

Here is one golden rule for parents to teach kids about money savings. Appreciate, support and validate your children when they achieve the targets. That is the most important thing that children need to grow a habit.

When parents appreciate them for the right things that they do, it encourages them to do the same thing again and earn that appreciation.

  • Be a Role Model-

Discuss some nuances of finances at your home openly. When there are extra earnings and when there are limits on expenses, share it with the children (especially if your kids are above 12 years of age). They may not understand it at all. But will at least start developing their thoughts on money.

Ideally, parents should be clear about their own wants and needs. Remember that children imitate and observe what their parent do. When they will see that parents are majorly spending money on needful things, they will imitate it to. This makes money saving easy as a habit.

To conclude, these tips are the easiest one to teach kids about money. From now itself, make savings a habit for your kids. Show them, this is an easy way to make their dream come true.

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