Kids get the idea of spending money. Nearly all of us – parents and kids alike – are surrounded by the opportunity to spend money every day. But what about kids saving money? Are there the same options to teach them about that?
Saving money is one of the most important aspects of building wealth and having a secure financial foundation. Yet many of us have learned the importance of saving money through trial and error, and more importantly, experience.
In school, we aren’t really taught about the importance of saving and many of us find that as adults, we have to fend for ourselves.
But there are ways to empower the next generation, and that starts by teaching children the importance of saving from a young age. If you are a parent, here are 6 ways to teach your children about saving money.
START WITH A PIGGY BANK
A piggy bank can be a great way to teach your kids the importance of saving, while giving them an easy way to do it. Tell your kids that the goal is to fill up the piggy bank with dollars and coins, until there is no room. Illustrate that the piggy bank is for saving money for the future and that the more they save, the more their money will grow.
OPEN UP A BANK ACCOUNT
Once the piggy bank is full, take your child to the bank to open up a savings account for them. Have them count how much money is going to be deposited, so they can have a physical understanding of how much money they have. Show them the final number and reinforce the idea of interest.
It can provide a great source of motivation for your kids if they understand that their money will grow over time as long as they don’t touch it. A great example of compound interest is to show how doubling a penny once every day for 30 days will eventually generate $10 million dollars!