Learning how to save is a very important skill right now. The prices of goods continue to go up, more people are engaging in businesses and investments to make money, employees are starting to work remotely—a lot of changes is seen in a short period of time. You’ll never know what’s going to happen in the next few years. So, to make this time worthwhile, you should teach your children how to save as early as now.
There are a lot of benefits when your children learn how to save early. First, they would know the importance of savings emergency funds. They would learn how to value their money and let it work for them through investing. I know you have a lot of realizations now that you know how essential it is to have money in your bank or investments accounts.
Let your children enjoy their financial freedom by teaching them these easy steps to start saving.
Step #1: Learn how to identify needs from wants.
Start teaching your kids to save by learning how to identify needs from wants first. This is the secret to saving effectively. if they know what they need to prioritize, they will start saving money and avoid spending on things that don’t matter yet. At this point, they may not know what their needs are yet since you are providing every basic thing they need. But as you provide, educate them. Tell them what’s valuable and not.
Step #2: Don’t spend money on the things they don’t need.
Once your kids know how to determine needs and wants, the next thing you need to let them realize is that they don’t need to spend on anything that doesn’t have value. Tell them what they need to prioritize in the future—food, investments, housing, clothing, education, etc. Start telling them that gadgets and going out for lunch are not that important in life. They can spend their money wisely.
Step #3: Tell them to put their money in a safe place.
Next, give them ideas on how they can keep their money safe. Children are fond of piggy banks. Since they can’t know how to open their bank accounts yet, buy them piggy banks. Encourage them to put their savings in that bank. That’s one way you can teach your kids to keep their money safe. If you have time, open them a real bank account. Banks now offer children to have their accounts through their parents.
Step #4: No withdrawing until it’s time
Finally, savings only become effective if they are not withdrawn, not until it’s time. Encourage your kids to keep their money in their banks for as long as they can. Teach them how to make their own goals. Ask them what they want to buy with their money. You can say that whatever they want to buy or achieve with that money, they can get it if they know how to be patient.