Thursday, 7 May 2015
Saving your money can open up limitless possibilities—from going to college to booking a once-in-a-lifetime vacation to even buying the home of your dreams.
But it seems that saving is difficult for many of us, and the statistics around it are alarming. According to the Federal Reserve, a whopping one in five people near retirement age have absolutely no savings at all. These stats only reinforce the importance of learning to save at a young age. If kids are able to learn the value of saving early on, they'll be sitting pretty by the time they're ready to retire. So how do we teach our children the value of saving money to enjoy life in the long run?
Here are some techniques to get started:
Don't shield your children from financial discussions. This doesn't mean you should share your mortgage payment or your salary, but consider talking to your kids about how you save money. Tell them about how you've been working hard to save for something new, and that you're looking for sales to find a good deal. Introduce the concept of cutting coupons, and have them participate to emphasize how you can save money on shopping.
When writer Miranda Marquit of the Money Crashers blog started her son's financial education, he wasn't even 5-years-old. She did this by creating a reward system that involved coupons—every time he did something good, she would give him a coupon that he could cash in for a DVD or a television show. She labeled each of her DVDs with the number of coupons required, and her son quickly learned that he needed to save his coupons to get what he wanted.
Just like adults sometimes use envelopes to compartmentalize spending and savings buckets, kids can do the same. Take one envelope and ask your child to draw a picture of a short-term savings goal, like a toy or a movie. Then, take another envelope and have them draw a long-term goal, like a new bicycle or even a trip to Disneyland.
With your new envelopes ready, use some poster paper and plot out how long it will take your son or daughter to get to their goal, recommends Marquit. Every time your child earns money, help them plot it out on the chart. This can help your children visualize their goals and see their progress.
As soon as you start talking to your children about money, consider visiting your local bank and see if you can apply for a savings account in their name. They may even have special programs that encourages young savers to save for prizes. But also make your children aware that some banks charge fees for savings accounts that require a minimum balance. Savings accounts are a great way to get your children started on their financial education.
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