Teach your kids to save and manage their money in the future

Child with pocket money jar

If you have a family and live on a budget, then you know that you need to build up your financial security, not only for yourself but for your kids as well. You also know that in time your children are going to get older and the will need to learn good financial habits so that they can survive on their own. It really is never too early to start educating your children on finances because the earlier they start, the better the mentality they’ll have as they get older. It begins by teaching them that money must be earned first and then saved. But there are quite a few methods to do it. Below are some ways to teach your kids to conserve and manage their money in the future.

Open up the talk about money as soon as possible

As soon as children are old enough to understand that money can be exchanged for goods and services, it is essential to open up the conversation about how one earns money, i.e. through a job, and then saves or invests that money to further their plans in life. My boys are six and eight, and for a few years now I have explained that mum and dad work to receive money which helps us save for the future, including buying a house and a car, as well as investing in the business to grow more wealth.

You don’t have to be super detailed about how it works – that can come in time. The importance here is to open up the conversation and make them aware that money doesn’t grow on trees, nor should it be treated as such. Money should be treated as it is, currency to assist us in improving our future.

Introduce money math games

A great way to teach kids about how money works is to introduce games like money maths, which will not only teach them about math calculations but also how money is calculated and used. Money maths is also a great way to help children understand the value of the pound by learning what each currency corresponds to.

There are lots of great money games around that you could introduce at home. Money manager games like Monopoly is a wonderful way to teach kids, not only how to work money maths, but how to save and invest their money into property. During a game talk about what it would mean for them to invest in a property in the future and the kind of return, they would expect. My six-year-old is already a Monopoly mogul. He saves all his money until he reaches the two most expensive streets on the board, Park Lane and Mayfair, and then he clears us out by investing in houses and hotels. He’s learned quite quickly that saving your money and investing it into something that offers a significant return is the way to maximise chances of earning more money in the long-term.

Introduce kids to budgeting

Part of getting your children on board with financial savings can be making it a family plan to save and invest, and even having a little fun with it at the same time. You could have different weekly activities that involve saving money that you and your spouse can discuss with your children and make different goals you’d like to see them achieve. But even during their play time, there are ways to help them learn such as playing games like the ones listed here. Basically, the sooner you start your children on their financial savings journey, the further ahead they’ll be once they reach their mid high school and college years. The plan is to keep them out of debt and teach them the responsibility of saving and managing their money before its too late.

Clear savings jars are king

Even in the digital age, you should still emphasise the importance of cash to kids because it lets them know that money doesn’t grow on trees. Financial expert Dave Ramsey recommends getting your child a savings jar when they’re young and allowing them to see the money grow as they save it. He also suggests making sure it’s not free allowance cash but the money they earn from helping around the house and putting in their share of work because, again, the idea is to make sure they know money must be earned. It also makes it less likely that they’ll be tempted to go out and spend it.

Look into a child savings account

Another great way to save money is to find a child savings account that offers interest on deposits. Let your child come with you to the bank and deposit their hard-earned cash from their jars into a savings account while the bank manager can teach them all about what happens to their money under the responsibility of the bank. Show them their monthly bank statements so they can see how their money grows. They will enjoy seeing the value of their bank account increase and the euphoric feeling they get knowing that it is all their money that they saved.

Get kids used to paying in cash

Kids with cash

While it’s important to use your credit card as needed and eventually teach children about credit scores, you don’t want them to get the idea that credit cards can be used for everything. Using cash at the register when they’re with you is a good way to make sure they learn that they should only buy things that are within their means. Plus having them hand it to the cashier can also be a teaching moment.

Talk about bad loans and the impact they have on their future

There are of course times and places where loans are important such as mortgages or business loans. But getting into a habit of borrowing money is not advisable. It’s important to warn your children even while they’re still young about predatory loans. Show them how to avoid high-interest loans like car title loans. It’s important to let them know that loans are only intended for significant financial needs when your income is steady. And credit cards are not meant to be used at their maximum limit.

Find ways for them to make their own money

Encourage your children to think outside-of-the-box and come up with ideas that can help them make and grow money. Discuss important business lessons like identifying a market need. They could come up with something as simple as creating a product or service and selling it on eBay. The idea is to show them that making money can be in their own hands. If they can dream it, they can do it.

Teaching kids about how to save and invest their money in the future are such valuable skills to learn. It will set them up with clear goals for the future and encourage them to plan accordingly. If we can avoid our children getting into debt, then this would be the biggest lesson we can pass on. So, let’s start now!

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Leyla Preston (595 Posts)

Leyla Preston is the owner and Editor of Motherhood Diaries global magazine for parents. Leyla is a busy mother of two even busier boys; Aron, 8, and Aidan, 7. When Leyla isn’t feeding, managing a gazillion tasks or cleaning the infinite mess at home, she is busy working on this magazine and a new cooking channel coming very soon – no rest for the wicked! You can follow Leyla on Twitter (@M_Diaries) or join the busy Motherhood Diaries Facebook group where all mums get together and share stories and solutions with one another: https://www.facebook.com//groups/motherhooddiaries/