“I want your phone,” declares my two-year-old after breakfast.
“No,” I respond.
“I want your phone,” she reiterates. Again, she’s met with a resounding no. She decides to move on.
“I want your tablet,” she counters, hoping to get a rise out of me. Even more so, she asks hoping that I give her something to stop her requests.
Smartphones, tablets, game consoles, and other expensive toys have dominated our children’s lives in the past few years and the anticipated costs of raising children will continue to rise as their “toys” become increasingly luxurious.
But how do you make the children more responsible? How do you help them understand the value of their (and your) things?
You make them pay.
No, not really, but you help them understand the value of a dollar, help them save and teach them to spend.
How? Here are three steps to help your children understand a value of a dollar and get a grounding in finance for kids.
Give them money to save
By the time most children are adults, they may have received a few dollars from birthdays and Christmases. The few realize that this is the only money they will receive for a while. The majority will immediately start planning all of the money they want to spend.
How do you combat that? You give them money regularly.
Whether it’s an allowance or chore-based, children have to understand that it’s not feast or famine. A habitual paycheck will net you major gains. The regularity will help show that they don’t have to spend every dollar because there’s another one around the corner.
Buy a special piggy bank
Kids are fascinated with cool things. Why not make saving cool with a special piggy bank which inspires them to want to fill it up.
My youngest loves Hello Kitty, the middle loves Minnie Mouse and the eldest is into anime.
Therefore, I have a Hello Kitty piggy bank, a Disney piggy bank and well, a plain green piggy bank because, well, my eldest is 12 and not swayed by gimmicks anymore.
Separate savings from spending
It’s tempting to have your child put all of their money in their piggy bank. Doing so enforces that whenever they need something, they should use their savings. That should not be the case. Their savings should be for a “rainy day” or a “specialty buy” and you should treat it as such.
In our house, we have (1) a short-term goal savings, (2) long-term goal savings and (3) a spending fund. Whenever they want something today, they can dig into the spending. If it’s something they really want, it has to be designated as the short-term (smaller purchases) or long term (larger purchases).
For the little ones (under five), we keep it simple, dividing it into two categories: saving and spending. Still reinforcing that they should not be spending every dollar they receive and encouraging that they should save something.
Crack, followed by an “Oops,” is the tale of many parents. The average smartphone screen cracks within the first 10 days of use. And children’s fingers are slippery. Between the cost of the device and the cost of the repair, one gift could easily cost a thousand dollars, but these tips begin to reinforce grown up money management concepts in a way that kids can understand and relate to.
It works for us—what do you do to encourage your children to save money?
I make my kids save their money and think about what they want to buy. They are realizing that they can get bigger items if they save longer
Thank you for these helpful tips! This is so hard sometimes.
It’s important to teach them how to save as early as possible. It gives them an idea that money is something that you can’t easily give and that will allow them to value the things that they have too. I love the tips that you have here! They are very helpful.
It’s not always easy to make them understand how money works but if you explain it to them like this, I’m sure they will learn how to value the gadgets that you give them. Teaching them to save money is great, it’s going to help them a lot in the future.
Saving money is very important and if your teach kids that they turn out a lot for responsible.
I’m so glad that you share this awesome tips.
Nice tips! I will make these for my kids, I am so sure that teaching finances is very important.
It’s so important to teach our kids the value of money. I love the idea of giving them an allowance and letting them save and budget for toys.
I wish I had a step by step finance guide when I was younger, it might have made me better at saving now!
Teaching children about finances and money is so important. I think the sooner they develop good money habits the better.
These are great tips!! Teaching kids the value of money early in life is so valuable to them and makes them understand the value of a dollar!
All great tips that I hope to someday instill in my daughter. She’s a little too young to understand money and savings.
I think these are great strategies for teaching them to save. It helps to start good habits early on.
My kids have had piggy banks and savings accounts. I think it is very important for them to understand the value of money and the hard-work that it takes to earn it.
When my daughter was little, I had very little money. I was a single mom working two jobs trying to make ends meet. She saw first hand how much we struggled. That taught her a lot right then and there.
Keeping spending from savings is smart. I encourage my youngest to save.
I’m happy our kids love to save. It is something we started with them from a young age. You have great tips here!
Great tips!!!! My parents always gave me money to save when I was younger. It was always fun to see what I could save up for
Great tips! I will work on it for my son, I am so sure that teaching finances is very important. I need to do that ASAP!
It is a life long process. The other day I sat down with my daughter a 19 yr old college student to talk finances. To be exact her finances.
We discussed income, expenses, saving, investing and how to pay for a trip she wants to take to a Supernatural convention.
I have been teacher her about money for years, but there are things kids won’t learn until they actually face it, participate and experience.