Saving and Spending: Introducing Children to Money
By teaching your kids about money from an early age, they will be able to grasp its importance. Money plays a big role in our lives. From saving, spending and investing, the talk of money is heard everyday and everywhere. Educating children about money can encourage them to start saving and also help them realize the value of a dollar. There are many ways to do this. If you give your children an allowance, explain to them why they are getting an allowance. They may question about what they can do with the money that they earn. Depending on the age of the child, an allowance can be either used for school lunches and weekend money or just deposits made into a piggy bank for rainy days. Regardless, children can have their own money and with enough guidance can appreciate it and can really set a goal for how they plan to use it.
Know the denominations
When giving your child money, separate bills into denominations and add together how many $1 bills make up a $10 bill. By breaking bills into smaller denominations, kids also have the option of putting aside $1 for every allowance they earn. This dollar put aside each time can introduce a young child into the world of saving.
Set goals with your child based upon what his/her goals are. There is a difference between what a person needs and what a person desires. Explain to your child that when you earn a paycheck, there is a certain pot of money that goes to essential items such as groceries or electric bills. There is also another pot that is used for money set aside. This pot of money is mostly needed for things such as vacations or saving for a newer car. Ask your child to separate his/her money into separate pots. This will give children an early indication of what it means to spend and save.
Going to the bank
If your child is old enough to accompany you, why not go to a bank and open a savings account for them? This may seem like a very big deal to a child and it will open their eyes to the world of banking. Seeing that he/she has money a big, financial institution will make him/her feel like such a big kid!
Going to the grocery store
Grocery store trips happen more often than not for a family and it can also teach kids about how many is spent in a real-life setting. By going through each aisle and looking for the items that are indicated on the grocery list, kids can see that items can be priced at different values. At the checkout counter, your son or daughter will witness how the groceries add up, too.
Teaching your kids about money (especially saving) can never be a bad thing. An early education will benefit them for the rest of their lives.