Teaching the Concept of Saving to Kids: The Best Lesson for Money Management
by:
BMA Editorial Team 3
A question generally arises as to why you should be teaching kids about money when they are young. Ever spotted your kid leaving that costly computer game you bought for him lying on his bedroom floor, just waiting to get trampled on?
You can see it now... when it does break, he comes running to you crying that he absolutely must have another one straight away as it was his favourite thing. Has this already happened in your household?
Let's take a quick trip down memory lane to the first time he even asked you for the computer game. You are in the toy store and he's salivating over the most recent Mario game and is telling you how he'll just die if he doesn't get it.
Because of his constant whining, you seriously consider just buying it for him as it's quite a long time until his birthday or even for Christmas to come around. Although it's expensive, the price of the computer game certainly seems less than the price you'll pay for your son constantly asking for it every time you walk past the toy store!
But wait, there's another choice to consider. Now would be a perfect time to start teaching your kids about money. How can you do this? First, tell your son the price of the computer game and then tell him that if he wants it, he must save his own cash for it. This will certainly teach him the value of a dollar!
Sure, he'll complain it may take him a long time to save for it himself, but that's the whole point. We all have to save. Adults have to save for holidays, new cars and whatever other toys we want. Kids can't expect that whatever they want, they can instantly have. Now is the perfect time to speak to your child about earning their own money and saving a portion of it (even if it's only 10%).
As parents, a perfect way to teach your kids about money is to create a spreadsheet on your computer which resembles a cheque book register. Show them how to make deposits into their account (just use an envelope clearly labelled with their name and goal on the front) and write the amount onto the spreadsheet.
When your son is close to achieving his goal, be prepared for him to ask that one question: "Can you please loan me the rest of the money?" Be strong as I've found that giving in and paying for the remainder of the item is not that successful.
Generally, it is a better lesson for your kids to have them reach their goal on their own as the reward is much sweeter. Having said that, if your child is saving for something that is very expensive (for example a Playstation or XBox console), you may wish to consider offering to buy something that goes towards it (such as a computer game or controls that goes with the Playstation or Xbox). This will keep your child motivated and may make the goal more achievable.
Once all the money is saved, it will be a very special moment when they walk into the store with their cash in their hands and physically buy the item themselves. I bet you back at home you won't see that computer game abandoned on the floor!
He had to wait and try hard to earn enough money to make his purchase. He is proud of himself for achieving his goal. He will value the toy more and look after it. Now if you could just make him look after the remainder of his things...
About the Author:
Nicole Clemow has been involved in finance since 1999 and is one of the authors of "Teach Your Kids the Value of Money". For more strategies and tips on teaching kids about money, check out
http://www.squidoo.com/teachingkidaboutmoney
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