Saving money is a valuable life skill that a parent can teach their children since it is essential and a necessary life skill. The challenge, however, is to figure out when the best time of year is to teach kids money-saving habits and learn the best time to start.
While your child is bombarded with temptations to spend, saving money needs to be an important part of their financial education. Teaching them to save helps set goals and shows how earning interest helps money grow over time. As parents, your goal of saving is to teach your children how to avoid debt and set aside money for when they need it most.
As per the Behavioral researchers from Cambridge University, parents can start teaching their children about money-saving as young as 3. Your kids begin to form their lifelong money habits as early as preschool.
Sometimes there can be the case where your kid may demand a costly toy or a gadget. And they do not know how much hard work you have done to earn that money you will be spending on that toy. So, making them familiar with the importance of money and encouraging them to save money always works.
If you have no idea about what age is good to start encouraging your kids to save money and how you can teach them to manage and save their money; here is the article covering every topic.
What is a good age to start encouraging kids to save money?
It’s never too early and has no definite age to start teaching your kids about money management. Kids can begin to understand the concept of counting, saving, and spending from the age of three. Most children from only five start to understand the difference between ‘needs’ and ‘wants.’ So teaching your kids from a young age is a good idea.
Early childhood (ages 3-5)
Best for: Making your child familiar with the concept of money and its uses
Ages between 3-5 are the best age where parents can introduce their kids to money. Making children familiar with money when they start counting is a good option. You can teach your child the concept of money and why you need it while purchasing goods.
As children are fond of playing new and exciting games, keeping this thing in mind, educate your child about why people need money for purchasing purposes by simply playing a shopkeeper game with them. Of course, your child won’t understand the finances or prices associated with things at this age, but it helps your child understand the uses of money.
For the practical implementation,
- Give your child coins and make them count or sort coins.
- Help them to identify each coin.
- Play a coin identification game with your kids. For example: ask them to match the coins to the image along with their names.
Middle age (ages between 6-12)
Best for: Making your child understand the difference between wants and needs and the value of money
Children of this age begin to understand the value of money and set prices. This age is appropriate for acknowledging your child why you go to work, how much different toys cost, and how hard it is to earn money. It is the responsibility of every parent to enlighten their kids about the difference between “wanting” something and “needing” something, as kids are often confused about whether they need it or they would like to have it.
For the practical implementation,
- Playing the shopkeeper and customer game associating prices to each item would also help you.
- Showing your children and making them aware of household billings to have some idea about income and expenditure.
- Take your child to the supermarket or somewhere else for shopping and make them compare the things by reading the store’s price labels, look at the size of items and their price.
- Make your child sit with you during online shopping and ask them to compare things and which one is worth buying and better to skip.
Teens age (ages between 13-19)
Best for: Teaching your teens some basic accounting
Between 13 and 19 is the best age to experience your child what financial independence means. Children at the teenage start going out with their friends and start to spend more money than before. Also, by the age of 18, your teens can apply for their first credit cards. About 54.3% of teenagers between the ages of 18-20 obtained their first credit cards.
Your teenagers can start making some financial decisions independently and take steps to prepare to get their first credit card at age 18. But before they do, you need to help them develop critical thinking skills to make smart decisions about their money.
For the practical implementation,
- Provide your teens a concept about credit cards and their working procedures from age 15.
- Make your children understand that keeping money with them does not only mean saving money. Instead, educating your teens in investing money in shares is also saving with even more significant potential.
- Give your teens the basic idea about credit cards and the demerits associated with them. And also about the high-interest rate that may be charged by the bank when not paid entirely high interest by the due date.
Young age (ages between 20-24)
Best for: explaining the concept of credit cards detailly
Teenagers are developmentally ready to align their spending with their values. By this age, your teens have a stronger sense of who they are, what they care about, and how to start spending money more wisely as your teens are in the phase where they are growing into an adult. They are also starting to save more money, keeping the future in mind while making significant life decisions.
Add your teens as authorized users to your credit card only if you think they are ready. Doing so will help your teens establish a credit history and use your card for their everyday spending, but do not forget to take some time to review your credit card statement with them each month.
Why is it important to teach your child to save money?
As we all know, earning and saving money is way more difficult than it seems. Hence, it becomes important to teach your children to save money early, so they learn to value it.
As life is full of uncertainties, you never know when you need money for an exceptional case, such as unexpected accidents, loan payments, or unforeseeable circumstances.
Thus, starting to save money has no age limit. Give your children the head start to learn about money, how to save it, and help them handle money from their younger years to adulthood.
Some of the other benefits of teaching your child to save money at an earlier age are:
- Your kids will think twice while spending in the future if they know about the importance of money from an earlier age.
- Your kids tend to be more practical, wise decision-makers, hard-working, and serious about life.
- Becoming familiar with the importance of money from an earlier age motivates your kids to work hard, whether for a scholar in childhood or for fulfilling their desired set of goals in the future.
- Your kids can learn the importance of living within their means, which is one of the basic tenets of saving.
Parents teaching about saving money is the greatest asset that any child can obtain from their parents. It is very important for you, as a parent, to teach your kids the importance of saving money as part of his or her daily routine because it lays the foundation for your child to build a bright financial future.
A saving money habit is such a habit that takes time to build. Thus, it is always a wise decision of parents to encourage their child to save money from an earlier age. So, making your children familiar with the concept of money and saving it from their childhood makes them wise and good decision-makers. It also helps your kids to know about the meaning of hard work.
However, some parents still believe children do not have to learn about money and provide everything that the children need. With this approach, it can cause difficulties and disadvantages for their kids when they grow up. In adulthood, such kids can become impulse-spenders because of financial skills. They may even have trouble covering some necessities.
Thus, it is always the best idea for children to learn about the benefits of saving money at a young age. They will be proud of themselves, and they will be financially secure when they are older.
Note: For every child, saving money is an important life skill to learn. It’s not always going to be easy, but it’s definitely worth it for their future.