How Soon Can You Teach Your Child to Save?

Becoming a parent is a major event in anyone’s life. With it comes the responsibility of teaching your child all kinds of life lessons. You hope they will all be good lessons, ones they can take forward in a positive manner to use throughout their life.

One of these areas concerns saving money. If a child grows up with a good sense of how to save money and where to save it, they will have skills they can use when they grow into an adult. If they don’t have any real concept of money and what it is worth, they may well run into financial difficulties at some point.

How soon is too soon?

In reality you can start introducing the subject once your child has learned to count. You could use banknotes and coins when you are starting to teach them about sums, as this will help them understand how cash is used.

One great game to try at home is to set up a play shop they can play at with you where you can use real money to illustrate how much things cost. It doesn’t have to be exact but it will help them to get a handle on how things are bought and sold with cash in the real world.

Teaching through an allowance

Many kids get an allowance once they reach a certain age. If you plan on giving your kids an allowance you can introduce the concept of saving (if you haven’t already done so).

The idea is you can encourage them to save some of their allowance each week so they are able to save up for things in the long term. Make sure you give your child their allowance in smaller bills for this purpose. It is easier for them to save, say, $5 if you give them a $10 allowance in two $5 bills than it is if you were simply to give them $10.

Be prepared to answer any questions they may have

Kids are curious. They’ll have questions about why it’s important to save and what the benefits are. They may well ask plenty more unusual questions too. Make sure you have an accurate answer for each one of them. If you’re not sure of a particular answer make sure you find out and then tell them.

Each child is different

It’s impossible to give an age for when a child is ready to learn more about the ins and outs of saving and investing. Some will want to learn earlier than others, while some might have a natural curiosity about money. Some will want to save rather than spend, whereas others will be the opposite. Whatever your child turns out to be like, you should consider teaching them the most important lessons to ensure they see things from both sides of the fence. Spending money is not a bad thing and neither is saving – you just have to have the right balance of both to make life work.

Saving From a Young Age

There is a big difference between saving on behalf of your kids and teaching them good savings habits so they can start saving on their own. Many parents want to put something away for their children’s future – perhaps to help them through college for example. But arguably, teaching children how to save their own money is an even more valuable lesson to provide.

Let’s take a closer look at this to see how it works. We’ve all heard parents say their kids think money grows on trees. You can probably think back to your own childhood and remember times when you thought the same thing. You may have continued to think it until something happened to change your approach. For instance, maybe you got old enough to realize your parents didn’t have a huge unending supply of money. Perhaps you realized they had to earn it before giving it to you – and there were many other more important areas to spend it on before that happened too.

That’s why it makes sense to focus on giving your own kids the best possible start when it comes to learning about money. Some parents give their kids an allowance, but others are coming round to the idea of paying them to do chores around the home. This is often a better method because they understand they are paid in return for achieving or doing something. This is the same as going out and earning money for doing a job, as they will do when the world of work beckons.

Some parents would agree you can never teach your kids about this at too young an age. They can pick up knowledge about money and paying for things much younger than we might think. Even play shops and play money can help in this respect. If you teach them some essential financial skills at this stage, transferring to using real money and earning it for doing chores won’t seem as unusual. This is true if you open a bank account for them so they can put any money they earn into it as well.

The point is that kids with little to no understanding of how to handle money will very likely be the ones that run into financial trouble when they are older. In contrast, those that have been able to understand its value for years prior to this will handle it better when they become responsible for their own finances. Kids very often pick up on their parents’ financial habits too, so if you handle yours responsibly it is a great gift to pass down to your children.

Give this some thought if you haven’t yet started teaching your own kids about savings and how to handle money. The right lessons taught now will make the world of difference to how they manage in the future. They may turn round one day and thank you for everything you taught them – and that would be a fine moment to have, wouldn’t it?

Teaching Kids About Money and How to Invest It

Parents have many essential skills to teach their kids from a very young age until they grow into adults. But surely one of the most important ones is the ability to understand the value of money, how to use it and how to make the most of it by trying to invest it wisely.

Understandably this is something that some parents struggle with. Indeed some adults struggle to invest their money wisely or even to manage it successfully. In this situation it would be difficult to know how to teach your kids something when you don’t know about it yourself. It may even do damage to try teaching something in this situation, so if this describes you your essential first step would be to educate yourself before moving on to educate your kids.

What can you teach your kids about investments?

This really depends on what age they are. Younger kids can start learning about money and what it can buy in very simple ways, such as through role playing. Bring out the toy groceries and the play money and start there. Understanding what money is and does and what it can get you is only the beginning, but it’s a very good place to start.

Different kids will learn at different paces, but as with other things in life they’ll start asking questions before too long. You can use this to gauge what they are ready to learn and take in as you go along. For example they might start by asking about money in general. It might be a while before they are ready to find out about investing and how this helps to grow your money into something more.

Bite sized chunks of fiscal facts

It’s worth noting that money and investments are two very different things. Thus it makes sense to ensure you focus on one before the other. Also don’t try to teach your kids too much in one hit. Learn to gauge their attention span so you can fit in your fiscal lessons in bite sized chunks. If you try to bombard them with too much in one go you will end up boring them and they’ll associate boredom with money and investing. That’s not what you want to achieve.

Remember too that you can teach them valuable lessons while you are out and about shopping. You could also let them pay money in for you at the counter at the bank. This can be a great way to familiarize them with money and how it all works.

As you can see it only touches on the surface of teaching your kids some of the most valuable lessons they can take forward with them into their lives. No two parents will take exactly the same approach to teaching their kids about finances. The trick is finding the right approach that will work for your own kids, so you always get the best results. This will set the right tone for the future.

What Does Investing in Kids Really Mean?

When we talk about investing we typically think about money. This is understandable but when it comes to kids, money is not the only way we can invest in them.

Educating them with knowledge about money

One of the best gifts you can give your kids is to teach them about money and how to handle it. Unfortunately many people do nothing more than put money away in some kind of investment, so they have something to give their children when they reach the age of, say, eighteen. This is to be commended, but if the children are not taught the value of money and how to make it grow, they will be much more likely to waste that money rather than putting it to good use.

So make sure you teach your children about money – what it can do, how to save it and how to make it work for them – from a very early age. They will learn much from such lessons, and it is a good way to make sure you provide them with knowledge they can use for the rest of their lives.

Investing in their skills

What do your children want to do with their lives? Once they reach a certain age they will start thinking about how to progress in a career of their choice. This is a good way to think about investing in your children, by helping to finance their learning in this way.

Of course this could mean anything from helping to pay their way through college to investing in a series of books or a one off college course to help them learn something completely new. You can invest in your kids in lots of ways; some people even invest their time in them to help them learn the ropes in the family business. As you can see, there are lots of ways to invest in what is one of your biggest assets.

How will your child benefit the most?

No two children will be the same when it comes to investments. Some will understand money very easily from an early age and will want to save as much as they can to provide them with a cushion when they are older. Others will live from day to day and need more guidance with their cash.

We can see that investments of this kind are among the most important ones we could ever make. In truth it is a combination of guidance, knowledge, support and savings that will ensure a child gets the best start in life. So it makes sense to think of the word ‘investment’ in the broadest possible terms. This is how we can ensure we do the best for our kids as well as enabling them to do the best for themselves.

So you see, if you are still thinking of investments purely in a financial sense, you are only just scratching the surface. You can do much more than this from today onwards.