When it comes to teaching your children about the importance of saving money, it’s crucial to start young. Why? Because that means one less thing for you to worry about when they get older and move out on their own. We’re not saying you should be introducing them to the concept of compounded interest before they can even spell the word ‘money,’ just that you should incorporate simple saving values from the very beginning — before it’s too late.
The Good Old Piggy Bank
Like they say, “if it ain’t broke, don’t fix it.” The age-old piggy bank is a perfect way to introduce the concept of saving money to your toddler. And these days, you don’t have to feel tied down to a pig. Feel free to pick something more interesting, whether it be a baseball or a princess bank. These basic financial tools are not only helpful, but they’re also fun. Periodically have your little one choose a small toy or treat and tape a picture of it to the jar. Then encourage them to deposit any money they receive (e.g. from birthdays or grandparents) to save up for whatever it is they want.
Once they have enough, help them buy it and start from scratch with something new.
Match Their Savings
Once your child is old enough to start earning an allowance, make it a requirement for them to save a certain percentage (e.g. 10 or 15 percent) and offer to match their contributions up to a certain percentage for every dollar (anywhere from 5 cents to a dollar). It’s like their very own TFSA. This gives them more of an incentive for saving their income.
Tracking their chores can also help. By creating a simple chart for the refrigerator that uses different stickers to represent different amounts, your children can actually see their progress. Visualization will help them learn while they earn. When they see their progress right in front of them, it encourages them to work even harder.
Open a Bank Account
Once your tyke turns teenager and has begun to understand the concept of interest, it might be a good time to help them open up their own savings account. Make sure to give them freedom when it comes to their finances — it is their money after all and you don’t want to discourage them from saving by being controlling. So allow them to withdraw from their savings as they see fit. However, show them how to use online banking as a monitoring tool so that they can track their expenditures as well as their accumulated interest.
Be Open to Discussion
It’s sometimes hard to see your kids as young adults, but when it comes to money, that’s exactly how you should view them. Talk about everything from how a credit card works to the rising rates of student loan interest. Show them how to write a check and balance a checkbook. Explain to them the difference between an RRSP and TFSA. These small things can ultimately help prepare them for the future and make it a lot easier on both of you when it comes time for them to leave the nest.
Nivene obtained her Bachelors of Communication from Loyola University Chicago and currently writes for the CashNetUSA Content Hub, a company that offers a cash advance online and online payday loans. She loves to discuss fashion, finance, TV and cupcakes. Rumor has it she has an owl fetish and drinks too much coffee – that is yet to be determined.