Learning young about saving money can pay off when the child grows older.
Teaching children about saving money can help them establish good spending habits and set up goals for their future. Because money affects most of us on a day-to-day basis, there are many ways to provide money lessons and tips to kids. Savings tips can come in various forms, from setting up allowances and savings accounts to demonstrating the power of interest. Depending on a child's age and understanding of money, different tips can be used to teach them the implications of saving.
Save First, Spend Later
Encourage children to save a percentage, such as 10 percent, of any money they receive from allowance or gifts. That way they can enjoy their money now but also save up for something they wouldn't normally be able to afford, such as a new bike. This will teach help teach kids about the value of money and will positively reinforce the notion of saving.
Bargain-Shop
When a child sees something he wants, encourage him to look for similar, cheaper alternatives, or the same product that is cheaper elsewhere. Many kids are unaware that prices cam vary significantly depending on brand name or retailer. You can demonstrate this point by showing kids how much money they have left over by bargain-shopping instead of "regular" shopping.
'Kid-Specific' Savings Account
Many banks and credit unions offer special (higher) interest rates to kids who are younger than a certain age. Children will more enjoy saving if they feel empowered or privileged because they have their own accounts.
Invest Young, Grow Rich
When a child is old enough to have a strong concept of money, introduce her to the power of investing. Tell her that by saving, not only can she use her money to buy nicer things, but she can actually have her money grow through interest. An easy way to demonstrate this is to give a child a bag full of pennies and tell her you are a bank that will invest their money. Have her give you one penny a day (to be placed in a jar or piggy bank) and keep track of how many pennies she has "invested."
At the end of the week, add a few pennies to the jar and let her count them. She will realize she has more money than she "should." Explain this as investing. Tell her to imagine how much money she could have if she invested dollars instead of pennies.
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