Why Teaching Your Kids to Save at an Early Age Is Just Good Practice
As parents, we have a duty to raise our children to become happy, healthy, and responsible adults. One of the best things that we can teach them – even as young as three years old – is how to save money. Teens and young adults who have a firm understanding of budgeting and saving have a far greater chance of becoming responsible and successful in their later years.
In Their Early Years
Childhood development experts suggest that children as young as three years old have the ability to understand the basic concept of money. A three-year-old knows that the toy he or she wants costs money, and he or she is capable of understanding that you, as the parent, have to go to work to get that money. One of the best ways to start instilling values into very small children involves teaching them how to count dollar bills.
For example, if your child wants to purchase a doll that costs $20, count out twenty $1 bills and explain this is what it takes to buy that doll. Then, explain to your child that you will give her a $1 bill each time she completes a certain task. When she has enough, she can buy the doll. It sounds simple enough, but even something as basic as counting out $1 bills together can lead to a lifetime of responsibility.
As They Get Older
As children get older, they start to want more expensive things. For instance, your son may ask you for a cellphone. This gives you yet another opportunity to instill a sense of budgeting into your child. A cellphone comes with a monthly bill, so you can explain to your son that he will need to save his money – whether from a part-time job or his allowance – to pay a percentage of that bill each month.
Things really kick into gear when kids turn 16 and they want to buy a car. This is probably the biggest opportunity you will ever have to help your child learn how to save. Hopefully, you started early and helped your son or daughter create a savings account, and there might just be enough there to pay for a dependable car. You will also have to teach your child about the responsibility of carrying insurance, buying gasoline, and paying for basic maintenance and repairs. What’s more, you will also need to help your child learn the importance of putting money in a savings account for a rainy day.
What You Really Teach Your Kids
In short, when you start at a young age and continue to teach your children how to budget and save money, you do all of the following:
- You teach them that they have to earn the money to buy the things they want or need.
- You teach them the value of that money so they are less likely to spend it on things they don’t need.
- You teach them that it is important to set money aside for things that might come up unexpectedly.
- You teach them that they have to budget their money to pay for their monthly responsibilities, such as auto insurance or cellphone bills.
There is no denying that teaching our kids the value of a dollar is just good practice. When they know how to save and how to spend responsibly, they become more responsible adults with a much better chance to succeed in all aspects of their lives.