Saving money is a habit that takes time to build. Start financial education for your kids at an early age for lifetime habits. According to Investopedia, 63% of Americans were living paycheck to paycheck till the end of 2020.
Here are some tips from our community moms who have been teaching and educating kids on saving:
- Providing a place to save: Basic saving habits starts from a piggy bank/ container/ clear jar. Kokila, a mother to a 12 and half year old boy, Dhruva and a 4 year old girl, started teaching her son about saving when he was 4. “I bought a piggy bank and encouraged my son to put whatever coins he had in the piggy bank”, Kokila said.
- Giving the choice to kids: Shweta, mom to 10 year old Navya, has been teaching her daughter the value of money in a novel way. “Navya has been trying to get a folder which she really does not need for school. I told her it is her choice to buy it or not” Shweta said. She added the condition that the money for the folder will come out of Navya’s pocket money. “My daughter decided that she does not want the folder any more”, Shweta said. She also added that her daughter probably would have taken the folder as long as she did not have to spend her own money. This method not only teaches the child to value his or her money but also teaches responsibility, as they take ownership of their own money.
- Wants Vs Needs: Another important step is to explain the difference to kids between wants vs needs. For example, help them differentiate between essential Needs such as rent, grocery, car and other basic expenses and Wants, which includes everything else. Shweta shares her own budget with her daughter. The family saves for every Want item. They defines specific goals. An example Shweta gave was, ‘vacation funds’. “We all contribute for this, my daughter saves in the piggy bank for our ‘vacation fund', while the adults save in the bank”, Shweta said.
- Earning money: The best way to value and save money is by earning it. Good habits start early. “I used to pay my son a dollar for every towel he folded, he started folding towels as a toddler”, Kokila said. This way, Kokila believes that her son learnt to appreciate the money and the importance of hard work as well.
- Bank Account: As soon as your child gets older, open a bank account for your child. This is the next step in the financial education. Some people believe that the right age is 10 but is is up to you.
- Budgeting: when kids are a little older, a simple expense vs income sheet will help the kids to track their expenses. A sample sheet by the MK team of Edison is available for download.
- Bottom line talking about money matters should be part of regular conversations: According to a survey conducted by T. Rowe Price, a global investment firm, most parents are reluctant to talk about money matters with their kids. T. Rowe Price recommends that parents talk about money matters with their kids every week.
To help parents discuss money with their kids, T.Rowe Price created MoneyConfidentKids.com, which provides free online games for kids; tips for parents that are focused on financial concepts, such as goal setting, spending versus saving, inflation, asset allocation, and investment diversification; and classroom lessons for educators
Please fill out this form if you are interested in a budget expense sheet for your child. This is a simple 8.5 by 11 form that can be printed on a regular printer. Instructions on how to fill have been provided in the form itself.