5 tips to inculcate money-saving habit in kids
It is essential for small children to have a healthy relationship with money and educating your kids on the same is not a one-day job. The habit of saving money is a time-taking process and many adults are yet to master it. So why not start early and teach your kids the value of saving money? Here are a few tips.
The first step is to teach them the difference between what they want vs what they need. Start with basic examples of needs such as home, education, and clothes. Then make them understand how those extra soft toys and chocolates are "not needs" but "wants." Try to illustrate through your spending and how you refrain to spend on your wants.
When kids get a fixed amount of money every month, they learn to save eventually, especially when they want something that is out of their budget at the moment. You can also set some ground rules for pocket money, like helping with household chores. When kids work to earn their pocket money, they value it even more.
Kids are often waiting for their pocket money to buy an item they have been eyeing for some time. This is exactly when parents can help them set a savings goal. You can tell them how much they need to save each week to buy that thing by the end of the month. Slowly, you will see your kid doing the math.
There should always be room for mistakes, so do not get angry at them when they go a little off track. There will be times when your kid is unable to resist the urge to buy something and ends spending their entire money on it. But take that as an opportunity to teach them how to rectify it and give them another go.
Children look up to their parents. What you do affects them immensely. If they see you spend with caution, they will also ultimately learn to do the same thing. Tell them how you separate your savings portion from your salary to prepare for a better tomorrow. Let them know about your future planning and how you are saving money for their higher education.