Teach your kids how to save money with these simple tips

By FCT

When your kids start college or university, every lending institution wants to give them a credit card. If they haven’t developed good spending and saving habits by then, they may get into serious debt and ruin their credit score, or they may need to borrow from the popular “bank of mum and dad”.

It’s good to teach your children the value of money early in life so they’re set up for success in adulthood. As Warren Buffet said in an interview with Forbes magazine, “It’s never too early to help kids understand about money. Whether it’s understanding the cost of the new toy they want, or the value of saving money. Kids are exposed to money matters from a very young age, so why not help them understand it and develop healthy habits early on?”

On that note, here are a few simple tips you can use to make sure your kids are well-equipped to handle their finances.
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  • Show AND tell them how to manage money: Kids observe everything you do. If they see you comparing prices at the grocery store or putting money aside for a family vacation, they will understand how to live within their means and manage their money. On the other hand, if they see you buying unnecessarily expensive things and complaining about not having enough money, they could get the impression that material things matter more than managing money.
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  • Give them pocket money: Whether it’s a weekly allowance or earnings from doing little jobs around the house, giving kids their own money allows them a little financial independence. It also teaches them about how to use it and make choices—do they want a small toy now or do they want to save for a better one? Do they want five chocolates or one expensive chocolate?
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  • Talk about the difference between “wants” and “needs”: When you take your kids to the grocery store, they may say that they need something, like a bubble machine for instance. Teach them the difference between basic human needs (food, clothes, etc.) and wants (bubble machines). They should also understand that needs take precedence and they may have to wait to buy what they want.
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  • Work on savings goals: Set up saving goals for your kids—maybe it’s a new gaming console or a pretty outfit. You can also incentivize them by matching their savings dollar for dollar or by giving them a bonus when they reach a milestone.
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  • Let them lose it all: If you know your kids are about to spend their own money frivolously, let them. It’s better that they learn the valuable lesson—once you spend money, it’s gone and you need to earn it back—when they’re kids than losing their homes or ruining their credit scores as adults.
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  • Teach them to share the wealth: Kids should learn that it’s not just about spending and saving, there’s also sharing. It’s important for kids to know that there are others out there who need help. Encouraging charitable giving from a young age puts money management into perspective and teaches them empathy.
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Do you have any tips for teaching kids about money? Share them in the comments section!

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