It's definitely not an easy task, but teaching the kids to save money is an important and valuable life skill that is worth the effort. Chief Financial Commentator from CTV News
, Pattie Lovett-Reid
, shares her strategies and advice on how to teach children the importance of, and how to, reduce their spending and save money.Parents are often blamed for not educating their children about money, and more specifically about saving money. That may not be fair, but regardless, creating an atmosphere where financial conversations flow freely and money lessons are put into place is always an excellent idea..Ring in the new year by getting your children on the family-savings bandwagon. Here’s how:
SET SAVINGS GOALS
Begin by helping your children establish savings goals. Goals that excite your children may not necessarily excite you. It has to matter to your children if you want them to change their behaviour and save versus spend. Saving without a reason is pointless.
KNOW THE DIFFERENCE BETWEEN NEEDS VS. WANTS
We all have needs, but we tend to have more wants. Understanding the true difference between the two is a great place to start. Share with your children what you spend your money on, why you do it and why it matters. Clearly highlight what is a need in your life and what are the things you would like to have but might not be able to afford right now. This is a great lesson in discipline.
ENCOURAGE TO EARN THEIR OWN MONEY
Encourage children to earn their own money, and let them use it once they do. Try not to control how they spend the money they earn. You can impart real-life money lessons by, for example, having your children do chores for payment. Reward a great job and dock pay for poor performance.
Offer up saving incentives. You could start a matching program to fund specific goals. For example, if your child is saving for a computer required for school, perhaps split it 50/50. Reward achievement.
DON'T PUNISH THEM FOR MISTAKES
Your children will make mistakes. They will spend mindlessly. They will spend on frivolous things. Instead of reprimanding them, make it a teachable moment.
Help your children establish a credit rating by co-signing on a credit card. Keep the limit low and manageable, and act as a creditor if payments are unmade. To be clear, this isn’t a bailout: it’s a backstop so their rating isn’t tarnished if they extend themselves temporarily.
START A CONVERSATION
Talk about money. It shouldn’t be a taboo subject!
BE A ROLE MODEL
Act as a financial role model, and practice what you preach.
Explain why budgets matter. Help them create their own budget and hold them accountable to it. It is their plan, and owning your plan is key.
FIND A PLACE TO SAVE
Help your children find a place to save like a piggybank, a bank account or a coin jar. The actual act of tucking money away reinforces the mentality of saving over spending.[video_embed id='1801042']These are the signs that you’ve become too cheap[/video_embed]