This article was published on Rescu here.
Teaching our kids about money is one of the most important things we do, yet it’s often a neglected part of our education, as it’s not always something you can learn academically and is much more easily learned by ‘doing.’ With kids who are still learning the concept of what money does, this can become a great vessel for teaching important life lessons like the consequences of your choices. Saving money is not only important for having “rainy day” money or Emergency Funds when required; it’s also a way that can allow them to create something for themselves in the world. Wealth Creators Anonymous Facilitator and finance expert, Rebecca Hulse shares 3 tips on how to teach your children the importance of saving money.
DON’T CONTROL THEIR MONEY
Letting your children use their money as they please allows them to see first hand what money is used for. If you let them earn and spend their own money, they will start to learn what it’s like to have or not have money. Ask your kids questions when they both have and don’t have money so they can begin to have financial self-awareness.
Ask questions like:
– Do you like having money?
– Do you like spending money?
– What was it like to have money?
– What was it like to not have money?
When you ask questions and allow them to come to their own awareness, they then get a greater ability to see what their choices will create for them. It’s important you do not make them feel right or wrong for their choices or answers. This way they know, they can come to you with any question when they want to know more about money and not be embarrassed.
HONORING YOU ACCOUNT
This is one of the first tools that personally gave me financial awareness when I was 10. My dad gave me the book “The Richest Man in Babylon” to learn a different way of saving money. The concept is that you put away 10% of everything you earn to honor yourself. It’s a way of learning how to prioritize you instead of what you have to pay. For each person, adult or child, there will be a certain amount that when obtained will create a sense of financial ease.
To do this, especially if your kids receive pocket money or an allowance, you can help them set up a 10% account. It can be a physical piggy bank, online bank account or even a separate envelope or wallet. This way they can learn to calculate what 10% of that money is and then deposit it in their special account. This will also encourage regular saving habits as a prioritized activity, which is a nice side effect.
SAVING FOR SPECIFIC TARGETS
One of the most common sentences uttered to every parent is, “Can I have this?” However, if a child has their own money and ability to purchase what they want, they can create themselves. More responsibility for what they buy allows kids to enjoy what they have more. Encouraging your kids to create the money for what they want to buy is a great way to reinforce that they have the means to create what they would like to have and don’t need to rely on anyone’s hand out. It also gets you out of having to pay for everything all the time too!
Encourage your kids to ask how much things are to the shop assistants and see if they have the money to pay for it. If they don’t have enough money, you can then ask them “What could you create that would allow you to buy this?” and help them break it down mathematically. It could be three weeks worth of pocket money or they would need to wash the car a few times in order to earn the money to purchase it. It will also encourage them to consider if they would really like to have something, or just want it in the moment. It doesn’t matter how big or small the amount of money something costs, if you are willing to help your children see what it takes to create the amount of money to have it, they will gain greater financial awareness.
Educating your kids about what money can create for them and easy ways they can enjoy having money in their lives, is one of the best ways of teaching them the importance of saving money. Even if they then choose to spend it, and you let them make their own financial choices, they can start to take early ownership and responsibility over the money they create and what to do with it – and know what that means. This will lead to greater financial choices when they go out into the workforce as adults, as they know what they can create with money.