5 Ways to Help Kids Save Money in the New Year
With the New Year approaching, now is the perfect time to teach your kids a little more about finances! Knowing how to save money is a crucial habit, no matter what age you are. Showing your kids the value of money early on can help them learn good financial sense.
I realize it isn’t always easy to save money. Many Americans are actually living paycheck to paycheck. Still, when your kids know how to delay gratification and not overspend, you are teaching them lifelong skills that will help them have a more stable future!
I’ll go over some of the top ways you can help kids save money this upcoming new year. This way you can set new financial resolutions with them!
1. Discuss The Basics of Finances
Before your kids start saving money, talk to them about the basics of finances. Basic financial literacy is usually taught in schools, but you can get a head start with your kids using your own educational resources! Pick up books at the library or at a local bookstore.
My advice is to be hands-on with your kids by showing them real money. Start explaining what money is, what it does, and how you use it. Even if you mostly use debit cards or credit cards, it's good to explain the basics of money to kids. That way when they see you using your card you can tell them you’re using money to buy their things.
Once your kids have an understanding of what money is, explain what wants and needs are. This will help your kids know how to spend money and the value of saving it. I know it can be a little complicated to explain at first. Your kids should be taught that basic needs like food, shelter, clothing, healthcare, and education come first.
Make them understand that their wants come second. Video games, bikes, designer shoes, candy, and other things are definitely fun to buy but they aren’t a priority. Instead, show them the importance of spending on basic needs first. This way they start to understand why they need to save their money, and not spend it all on entertainment and fun.
2. Set Savings Goals
When your kids begin to grasp financial concepts better, then you can start setting savings goals with them. Most kids won’t understand why they need to save money. To a lot of kids, it might even seem pointless. Go over wants and needs again, and set savings goals so they can see exactly how beneficial saving is!
Nothing is more exciting to kids than getting a prize, and you can make saving rewarding for them with goals. For instance, if they want to buy a video game or a pair of headphones that cost around $50, tell them they need to save up. You can help plan the goal with them so they can get the thing they want responsibly.
Show them how long it will take them to save up with their allowance money. Then, set the goal and tell them they can get their game, or other items, once the money is saved.
3. Give Them A Place to Save Their Money
You’ll need to help your kids find a place to save their money. If you have younger kids, I recommend using a piggy bank. You can also make a savings jar to place any allowance money or gift money.
For older kids, though, it might be best to help them start a savings account through your bank. You can even have them apply for kid-friendly debit cards. I suggest looking over some card options at this link. Debit cards for kids are a great way to teach financial literacy. Kids can actively budget, save, and see what it’s like to manage their own money!
4. Have Your Kids Earn Their Money
While it’s fine to give kids money, just handing it to them won’t teach them a lot about finances. Instead, what I personally recommend doing, is having your kids earn their money with weekly chores. This is something I do in my own home.
Your kids might not be too happy with you at first, but if they want to buy things they’ll need to work hard and then save up what you give them!
This is a great financial activity to do with kids, as you are directly teaching them how to handle money, how money is earned, and how to save up. When kids are earning their own money, they are learning how to make financial decisions, even if it's on a much smaller scale.
5. Teach Them to Track Spending and Spend Smartly
Lastly, make sure that your kids are tracking their spending. Really, if they want to save they need to know how much they have and exactly where their money is going.
It can be easy to spend money, even as an adult. Since kids are still learning it's best for them to see where their money is going so they don’t get in the habit of overspending. If your kids are getting a kid-friendly debit card, this should be easy to track with a banking app.
If your kids are using a piggy bank or jar, then have them write down their expenses in a notebook. Every time they earn money and spend money, they should write it down, especially if your kids have saving goals. You can directly show them how close they are to getting what they want if they have good savings habits!
As a parent, I want my kids to understand the value of money and the importance of saving it. Teaching our kids about money can be daunting, but the sooner we do this, the better their future will be. Good spending and savings habits will follow your kids throughout their life.
You can teach them a lot on your own. The best way to help kids save money is by being a good example to them. Leading by example will help your kids become savers, as kids do follow their parent's habits. Take this time to educate your children and maybe even save more money for your family!