The recent economic down turn is enough to make anyone’s head spin. Things spiraled out of control very quickly as people lost jobs, homes and cars. Many people worried about how they were going to make it back and forth to work everyday when the gas prices soared out of control. Things that were once considered must haves got put on the back burner as luxuries as people struggled to put food on the table. It only makes sense to teach our children how to save money so they will be secure in times such as these.
Here are some of the basics to help you teach your children the value of saving money:
The first step in teaching children is always to talk to them about it first. Talk to your kids on a regular basis about why it’s so important to save and what can happen if you don’t. Tell them about times that you have come across issues in your own finances and what the results were. Start these discussions while the children are still very young. Young children can grasp things that you would never imagine possible.
Piggy Bank to Real Bank
When your child is little, purchase a piggy bank. Put money into it regularly. A quarter a day or something to that effect. When your child is old enough to know what money is, give the money to him/her to put into his/her piggy bank. Children love to watch their money grow. After the piggy bank is fairly full, help your child count the money. Make a big deal out of how much he/she has saved. It’s time to take the money to the bank to open an account.
It is important to take your child with you when you open the account. Your child will be able to see how opening a bank account works, which is a life long lesson. Each time your child wants to add money to the account, take him/her with you so that he/she can have the full experience. Go over the savings pass with your child so that he/she can see how much money that he/she has saved up already. The feeling of seeing that money grow will encourage him/her to continue to save more. It’s addicting!
Time to Pay the Bills
Children should be involved, to some extent, in the bill paying process of the home. Have your child sit with your while you write out the bills. Children need to know that things don’t come free. There is a reason that people work. It is to get the things we want and need. Showing children that spending all of your money at once will keep him/her from buying things if he/she may want more in the future. Having the children see how much the bills are can also help them learn that it is important to turn off the lights and television when they leave a room in order to save money. Life long habits will be learned and reinforced through this activity.
Pretending is fun and children respond well to it. Play a game of finance with them. Don’t worry, they don’t have to be older children, young children can play too. Use monopoly money. Set up a “grocery store”, a “house to rent”, a “Walmart” and “family”. This is really more like role playing. Have your child lay the role of an adult who is trying to make it in the world. Give him/her a small amount to start with. This can be how much money the child thinks is enough to make it.
The child then must pay the rent for the new “home”, buy groceries, shop for other things that are needed and buy anything extra. Don’t forget to add utilities into the mix. Once your child is done, he/she will see how much it costs to live in the world. Will he/she have enough money to survive? Will he/she have money to put in a bank account for savings?
You can make this game as complicated as you want for the child. When setting the “prices” for everything, keep it in perspective to what is going on in the world around you now. This will help your child learn many different lessons and it will be fun for them as well. You can practice this until your child has learned, through time, how to handle money and why it’s important to save. After playing the game over a period of time, throw in a recession. Loss of his/her job will wake him/her up to the realities of life. That is when your child will see for certain why it is important to save.
Savings has a greater value than simply accruing interest. Tough times hit and when they do, they can take us down with them. It is only the ones that truly prepare for such situations that will be able to survive it with little impact to their normal living conditions.