Whether it’s a new video game console, financial security, or the trip of a lifetime abroad, we all have reasons for saving money. Saving is an essential part of money management, but it’s not always easy to put money aside for the things we want and need – especially when you’re young!
With the right strategy, your children can learn how to become smart savers and develop responsible financial habits that will serve them for the rest of their lives.
Here, we’ve outlined 4 easy ways to teach kids about saving for a goal.
- Have a clear purpose
Simply saving money without purpose and without time limits is a difficult task – especially for children who don’t know about the necessity of having an emergency fund.
Having a clear goal with a specific amount and timeline can help to put the concept of saving into perspective.
Encourage your kids to start off with something small, such as a new toy that will only take a few weeks to save up for, to teach them the value of saving and the patience it requires. From there, you can help them to scale their savings goals upwards to bigger purchases and longer periods.
Check out our guide on goal setting for kids to learn more about goal setting strategies.
- Save a little, but save regularly
If you give your kids weekly pocket money, or you have a child who just received some cash for a birthday or a teenager with a part-time job, introduce the idea of putting aside an amount for the future or the sake of their goal.
Help them decide on how much they can afford to save – perhaps it’s 10% or 15% of their regular “income.”
Once they get used to this concept, advise them to save a little more money at certain times, if it’s possible. For example, at least once every three months put away 25% to 50%. Explain that it’s not about waiting until they have money left over, but about separating what they want to accumulate and put away.
- Separate spending money into needs and wants
“Needs” include things that your child cannot live without, such as nutritious food, transport passes, and protective or seasonal clothing. “Wants” include things like games, toys, and treats.
Children need to understand the difference between needs and wants so they can budget and save their money in a smart way. This will help them decide how much they can afford to save, when they want to splurge on ‘wants’, and the impact that budgeting can have.
The challenge for parents lies in the balance between treats and goals. It’s important to give kids some freedom in what they want to spend their money on so they can learn first-hand what it’s like to make good decisions (and sometimes make mistakes).
- Consider income and expenses
Budgeting is a huge part of saving. Sit down with your child and have them write down their monthly expenses in a notebook. SideKick provides a budgeting tool where you can set specific amounts of money aside per purchase type.
For example, if your child has a budget of $100 a month, together you can split up their salary according to their means. SideKick has many categories for budgeting, such as Eating Out, Travel, Fun, and Living. These categories help your child manage their spending and keep track of their habits. You can work together to set parameters and make any necessary adjustments.
To be a successful saver, there are many things to think about: why am I saving? How much can I save? Where can I save money? Encourage your children to pick attainable goals, keep track of their income and expenses, and stay motivated. Building smart saving habits early will make it much easier to maintain a healthy financial approach in the future.
