Financial skills are extremely important to navigate life, and it’s important that our kids know how to save money. But our schools don't focus so much on them.
As a parent, you can bridge that gap. You can set your child up for financial success by teaching them important lessons on how to save money as soon as possible. And this is why.
The COVID-19 crisis has wreaked havoc on many people financially. Many have lost their jobs, businesses, homes, and taken on more debt like never before.
But even before the pandemic, the situation wasn't any better. It is clear that when it comes to money, many adults only know so much. You don't want your child to repeat the same mistakes, right?
Financial experts say that the sooner parents start teaching their kids about money, the better off they will be. We want to help you nurture a generation of wise spenders and great savers. So in this post, we share five tips to set them on the right path financially.
Start With The Reason Why
Having a solid reason to save is one of the best ways to turn a teen into a saver. For example, if your teenager loves to go on trips or movies, offer to pay half of what they save towards it. This will propel them to spend less and even find creative ways to get paid, like doing paid house chores.
Small Is Better Than None
Some kids give up when they have little to save. If you notice this behavior, encourage your teen to save by showing them that consistency matters.
Explain to them that it is better to save a few dollars regularly than to wait until they can raise grander amounts. Use real figures to demonstrate how much they can save in a year if they make small deposits. Also, show them what that money can get them after a year or two. This way, they will appreciate small steps.
Encourage Ego And Peer Pressure Suppression
Studies show that people who spend beyond their basic needs do so as a result of social climbing and ego. For kids to learn how to successfully save money, they must stop focusing on how they appear today and channel that energy into a more productive tomorrow.
Help your teen realize that saving is a daily struggle against peer pressure and instincts. Explain to them why they don't need expensive phones, clothes or games just to keep up with the Joneses. That money can be set aside for college, home deposit, car, and retirement.
Caution About Unnecessary Debt
An important part of teaching your kids to save money is to also teach them about debt. When our kids start working, they make their own money. Although it is a great step, it is also scary and challenging. It is not uncommon to find teens getting into debt.
Just look at the number of programs that encourage students to go to college without taking loans as compared to those created to manage student loans. The same applies to companies and individuals offering 'get rich' fast schemes.
The sooner your child understands that no one survives heart surgery better than the person who didn't get the treatment in the first place the higher their chances of dodging the debt trap.
Celebrate Small Wins
Teens and kids in general love goals-based rewards. So anytime they hit a milestone. No matter how small it is, celebrate, or reward them.
For example, if they hit their monthly targets, offer to add a few bucks, or buy them gifts. The idea here is to treat them before they resume their newly acquired discipline. This keeps them motivated and nurtures the habit of saving.
Parents have a huge influence on their kid's financial discipline. If you want your child to be a great saver, you must teach them good habits. We hope these tips help you prepare your child for financial success.