Kids develop their attitudes and spending habits from a young age – and usually from their parents.
Teaching kids about saving from a young age will help set them up and get them ready for the financial challenges they will face in adulthood. It is critical for their personal development and helps them establish good money habits for life.
Because we are living in a time of online shopping, credit cards and internet banking, less and less kids are seeing people buying products and services with cold hard cash, and this can make it harder for kids to get their heads around the cost of living. Money essentially becomes ‘invisible’.
Teaching your kids to budget and about the value of money through real life situations helps them to understand how they can ‘earn’ – and therefor learn!
A good place to start might be with the family budget.
Get your kids involved in the discussions about the family budget and how money is allocated to living expenses including utility bills, food, transport, education etc.
By explaining to them exactly how much money your family spends each week and the where and why will help kids to have a better understanding of how they can budget, save and reach goals such as holidays and new toys!
Taking your kids to the supermarket is also a valuable exercise (although it may not seem like it sometimes!).
Take the time to explain to your kids about comparing pricing for like products – cheaper and more expensive versions – and what differences that may mean for the total shopping bill.
Giving your kids pocket money for household chores is great to teach them the value of earning. Talk to your kids about setting goals for their pocket money earnings – such as that new Xbox game they really want. Setting up a savings chart is great for younger kids, or opening a bank account and tracking the savings is great for older ones.
Another great way to show kids the value of budgeting is setting up three jars – one for saving, one for spending and one for donating. Ask your kids to allocate their pocket money between the three jars so they can learn the difference between spending and saving.
It’s up to you how often you choose to pay your kids pocket money, but it is a great way of showing them hard work equals reward and that you don’t just get something for nothing.
Show your kids how they can research their purchases online to find the best deal or price, and teach them about needs vs wants so they know how to think about the purchase they are just about to make.