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“Children as young as three years can understand financial concepts such as spending and saving“, says Jean Chatzky, an anchor at NBC News. Saving and spending money on sensible investments is a way of creating wealth. Although saving is an important aspect of wealth creation, most adults are reluctant to teach young people the importance of saving. One of the ways of empowering the upcoming generation on being smart about money matters is by educating children on how to start saving at an early age.
Initiate Family Money Meetings
Family money meetings are an excellent avenue to introduce the aspect of saving to children. These meetings should be regular. A study by Harvard University students found that introducing routine activities for children ensures that what they learn sticks. In addition, the meetings should be fun, engaging and inclusive to ensure that everyone understands. To make the sessions fun but important, parents can give everyone in the family a role to play in the meeting. Everyone’s finance goal should be stated including ways on how to achieve them. These exercises could include an exciting activity like creating a vision board in your living room.
Get them a Dedicated Place to Save
The best way of keeping track of financial goals set is by buying piggy banks for everyone. A parent can introduce three different piggy banks for different saving purposes. For example, saving for the future, spending or money for unexpected emergencies. Remind the children that the objective is to save as much as possible. At this stage, teach them the differences between wants and needs. That way, they can often forego the wants for the sake of saving and filling their piggy banks. Make them feel that saving is for a better course by not completely cutting on their favorite items. Also, letting the children accompany you to the bank to open saving accounts or deposit their savings is a good way to keep them motivated.
Offer Saving Incentives
One of the reasons why adults save in their employer’s retirement plan is the company’s matching contribution. After all, who does not like free money. Likewise, children get motivated to save when they know a reward awaits them. A parent can offer a certain amount as a bonus when the child hits their financial goal. However, the rewards do not have to cost money. They can, for example, include extended use of electronics and other privileges you and your child agree upon. Although the reward system is essential in the initial stages of saving, they should be short term and therefore phased out when the child becomes accustomed to the saving culture.
Children learn from what they see. Therefore, the best way to encourage them on how to embrace healthy financial habits is by leading by example. It is also important to constantly reinforce the concept of saving to ensure that children do not forget what they learn. Also, spending the saved money for the intended purpose instills accountability on your part, and they, therefore, look forward to more saving activities and in no time, it becomes a habit they cannot stop.
About Jane Sandwood
Jane has been a freelance writer and editor for over 10 years. She has written for both digital and print across a wide variety of fields. Her main interest is exploring how people can improve their health and well being in their everyday life. And when she isn’t writing, Jane can often be found with her nose in a good book, at the gym or just spending quality time with her family.