10 Money-Saving Tips for children and young adults
Saving money is an important life skill, but it is not always simple. In fact, according to a poll conducted in 2021, up to 54% of people were living paycheck to paycheck, with little or no money left away for future requirements.
Families may fall into this trap for a variety of reasons, both good and bad, but the saving habit should be instilled in children from an early age.
When it comes to money, teaching children about delayed gratification might help them avoid overspending and respect financial management. With that in mind, here are some suggestions for encouraging your children to save.
Parents may instill the habit of saving money in their children from an early age.
The first stage is to establish basic concepts like saving, budgeting, and goal-setting, before moving on to the next level of the discussion.
Giving children an allowance may teach them the value of money as well as the value of hard work if responsibilities are incorporated.
While younger children may want to save in a piggy bank, older children may prefer to retain their money in a bank or on a debit card while working toward their objectives.
Living within one’s means is one of the most basic saving concepts that youngsters may learn.
Examine the differences between wishes and requirements.
The first step in instilling the value of saving in children is to assist them in distinguishing between desires and necessities. Explain that all necessary needs, such as food, housing, clothes, healthcare, and education, must be met.
Movie tickets and sweets, as well as designer shoes, a bicycle, and the most up-to-date smartphone, are among the wishes.
You may also test them on common home items to emphasize the concept. For example, point out objects in their bedroom or kitchen and ask if the item is a need or a want. This aids in conveying the notion of prioritizing your spending and putting money aside for future requirements.
Allow them to work and earn their own money
According to the American Institute of Certified Public Accountants (AICPA), two-thirds of parents gave their children an allowance in 2019, with kids getting an average of $30 a week for five hours of work.
Allowing your children to earn and save money allows them to learn how to manage money, which is crucial if you want them to become savers.
They learn the importance of their hard work when you give them allowances in exchange for tasks.
Determination of savings goals.
To a youngster, being told to save without being told why may seem pointless.
Helping youngsters set a savings goal might be a more effective method to inspire them.
Help them break down their objectives into digestible bits if they know what they want to save for. If they wish to buy a $50 video game and receive a $10 weekly allowance, for example, assist them in calculating how long it will take them to attain that goal based on their savings rate.
Create a secure environment for your goods.
When your kids set a savings goal, they’ll need a secure place to save their funds. For younger children, this could be a piggy bank, but if they’re a little older, you could open a savings account for them at a bank or even acquire a kid-friendly debit card.
There are several applications available that provide you notifications when kids make purchases and let them set their own savings objectives.
Teach them how to manage their finances.
Being a great saver requires understanding where your money goes. You may keep track of your spending using a bank or credit card app, but you can also do it the old-fashioned way.
If your children are given an allowance, have them keep note of their purchases each day and total them up at the end of the week. Encourage them to consider their spending habits and how much faster they might attain their savings goal if they changed their habits.
Offer incentives for saving.
One of the reasons people save in their company’s retirement plan is because of the matching contribution. After all, everyone prefers free money overworking. If you’re having trouble motivating your kids to save, try the same strategy.
You may offer to match a percentage of your child’s savings if they have set a significant goal, such as a $400 tablet. You might also give your child a gift if he or she meets a savings target, such as a $50 bonus at the halfway point.
Allow for mistakes.
Giving children financial autonomy includes allowing them to learn from their mistakes. It’s tempting to step in and prevent a child from making a potentially costly error, but it may be more prudent to convert that error into a teaching opportunity.
They’ll know what not to do with their money in the future as a result.
Assume the role of their creditor
Not living over your means is one of the core foundations of saving. If your child wants something and is impatient about saving for it, being their creditor might help teach them a vital lesson about saving.
Let’s say your youngster wants to buy something at $100. You might “lend” the money and demand payment with interest from the allowance you offer. The lesson you want to instill is that saving may entail delaying gratification for a longer period, but the object you want to buy will cost less if you wait.
Discuss the subject of money
In a T. Rowe Price poll from 2021, 41% of parents indicated they don’t enjoy talking about money with their kids, with many expressing embarrassments about bringing it up.
However, if you want your children to learn about saving, you must foster a continuous conversation.
Lead by Example
According to the T. Rowe Price poll, just 59 percent of parents have any money set up for retirement, and only 55 percent have an emergency fund.
Being a saver yourself might aid your children in becoming savers.
You may encourage saving as a family activity by getting your emergency fund in shape, starting a 529 savings account, or just boosting your 401(k) plan contributions. You may also elect to save for a big-screen TV, a family trip, or a pool as a family.
How can parents help their children learn to save money?
Providing a safe location for children to save their money is one approach to encourage them to do so. For younger children, this may entail getting them a piggy bank; older children can get their bank account or debit card. You may also offer children interest in their savings, incentivizing them to save for the future.
What are some of the obstacles to educating youngsters about saving?
According to research, many parents are hesitant to even discuss money with their children. According to a T. Rowe Price poll from 2021, 41% of parents avoided having those dialogues.
How can parents educate their children to differentiate between desires and needs?
Parents can question younger children on objects found in the house, such as kitchen utensils, clothing, and toys, to see if they think it’s something the family needs or just wants.
By making that difference, children begin to understand that certain purchases are more important than others.
If you’re a parent, including saving into your child’s daily routine can help them build a solid financial foundation. Children who are taught good behaviors at an early age are more likely to grow up to be adults who are less financially stressed than those who did not get this type of instruction.